[Ylenia]

Allowance for Doubtful Accounts has a credit balance of $500 st the end of the year (before adjusting) and uncollectible accounts expense is estimated at 3% of net sales. If net sales are $600,000, the amount of the adjusting entry to record the provison for doubtful accounts is?

[Ylenia]

18,500

[AdamUTsel]

I would think it would be 17,500. If you need 3% of net sales to cover your bad debt expense, this is 18,000. You already have 500 in your allowance account. Remember, an allowance account is a contra-asset (liability). It should have a credit balance. Therefore, you need 17,500 additionally added to the account to cover your estimated bad debts.