In order to find out the allowance for doubtful debt figures, the entity has to apply {1bb28fb76c3d282be6cfd0391ccf1d9529baae691cd895e2d45215811b51644c} to a value. This value may be based on accounts receivable ending balance or the sales figure of the reporting figure. Here we are talking about the sales method. In this method, we do not pay attention to the balance available in the allowance for doubtful accounts. Instead, we apply a certain percentage to the credit sales figure and pass on the following journal entry:
Debit | Credit | |
Bad debt expense | abc | |
Allowance for doubtful debt | abc |