At the end of 20-2, Martel Co. had $380,000 in Accounts Re
Question and Solution
At the end of 20-2, Martel Co. had $380,000 in Accounts Receivable and a debit balance of $6,000 in Allowance for Bad Debts. Because it has been operating for only two years, Martel once again wants to base its estimate of uncollectible accounts on the industry average or the experience of similar companies. The industry and similar company percentages for the year were the same as in 20-1. REQUIRED Based on Martel Co.’s experience in 20-2, select the most appropriate basis (industry or similar company) for estimating its uncollectible accounts for 20-2. Prepare the adjusting entry on December 31, 20-2 for Martel Co.’s bad debt expense.