[daye.nyte]

Burger Company uses the percentage-of-sales basis to record bad debts expense. It estimates that 1% of acconts receivable will become uncollectible. Accounts receivable are $450,000 at the end of the year, and the allowance for doubtful accounts has a balance of $800 instead of a credit balanceof $1,500, determine the amountto be reported for bad debts expense.

1. Prepare the adjusting journal entry to record bad bebts expense for the year:
Dr Bad debit expense $4,500/CrAllowance for doubtful accounts $4,500.

2. If the allowance for doubtful accounts had a debit balance of $800 insead of a credit balance of $1,500, determine the amount to be reported for bad debts expense.
Not too sure how to do this, but I say it's $2,300 ($1500 $800).