Answer:
Bad Debts Expense $ 700 Debit.
Allowance for Doubtful Accounts $ 700 Credit
Explanation:
Sales $600,000
Uncollectible accounts expense is estimated at 2% of sales
Uncollectible accounts expense= $ 600,000 * 2%= $ 1200
Unadjusted Balance = $ 500 Credit
Estimated Balance = $ 1200 Credit
Required Adjustment $ 700 Credit
Adjusting Entry to record the provision for doubtful accounts is
Bad Debts Expense $ 700 Debit.
Allowance for Doubtful Accounts $ 700 Credit