Question

at january 1, 2025, winding mountain clothing had accounts receivable of $26,000, and allowance for bad debts had a credit balance of $4,000. during the year, winding mountain clothing recorded the following transactions for january view the transactions. read the requirements. requirement 2. post winding mountain clothings transactions to the accounts receivable and allowance for bad debts t - accounts. enter the beginning balances (jan. 1 balance) and the journal entries (using the appropriate descriptions as posting references), and then compute the unadjusted balance of each account at december 31 (unadjusted balance). requirement 3. journalize winding mountain clothings adjustment to record bad debts expense assuming winding mountain clothing estimates bad debts as 7% of accounts receivable on january 31, 2025. post the adjustment to the appropriate t - accounts. (record debits first, then credits. select the explanation on the last line of the journal entry table.) first journalize winding mountain clothings adjustment to record bad debts expense.

Explanation:

Step1: Calculate required allowance balance

The unadjusted balance of Accounts Receivable is $53,900. Bad debts are estimated as 7% of accounts receivable.
$$\text{Required allowance balance}=53900\times7\% = 3773$$

Step2: Calculate bad debts expense

The unadjusted balance of Allowance for Bad Debts is $1,900 (credit balance).
$$\text{Bad debts expense}=\text{Required allowance balance}-\text{Unadjusted allowance balance}$$
$$=3773 - 1900=1873$$

Answer:

Date	Accounts and Explanation	Debit	Credit
	Allowance for Bad Debts		$1873$
	Recorded bad debts expense for the period.