Question

walnut foods, inc., experienced the following revenue and accounts receivable write - offs. view the data. suppose walnut estimates that 4% of (gross) revenues will become uncollectible. assume all revenues are on credit. read the requirement. begin by preparing the journal entry fo entry table.) now, prepare the journal entry for bad debt for the month of april.

Explanation:

Step1: Calculate bad - debt expense for April

Bad - debt expense is calculated as a percentage of credit revenues. Given that all revenues are on credit and the bad - debt percentage is \(4\%\), and the service revenue for April is \( \$4000\).
The formula for bad - debt expense is \(Bad - debt\ expense=Service\ revenue\times Bad - debt\ percentage\)
Substitute the values: \(Bad - debt\ expense = 4000\times0.04=\$160\)

Step2: Prepare the journal entry

The journal entry to record bad - debt expense is:
Debit the Bad - Debt Expense account (an expense account that increases with a debit) and credit the Allowance for Doubtful Accounts (a contra - asset account that increases with a credit).

Answer:

Date	Accounts and Explanations	Debit	Credit
	Allowance for Doubtful Accounts		\(160\)