To determine the journal entry to adjust the allowance for doubtful accounts, you need to consider the current balance and the desired balance based on the year-end aging analysis.
1. Determine the adjustment amount:
The adjustment amount is calculated by subtracting the current balance from the desired balance.
Adjustment Amount = Desired Balance - Current Balance
Adjustment Amount = $98,000 - $28,000
Adjustment Amount = $70,000
2. Create the journal entry:
To adjust the allowance for doubtful accounts, you need to increase the balance by the adjustment amount. Since the current balance is a credit balance, you will need to debit the account.
The journal entry would be as follows:
Debit: Allowance for Doubtful Accounts $70,000
Credit: Bad Debt Expense $70,000
This journal entry increases the allowance by $70,000 and records the corresponding expense for bad debts.
Note: The specific account names may vary depending on the company's chart of accounts and terminology used.