Question

The Hernandez Corporation has a $3,100 debit balance in the Allowance for Uncollectible Accounts account before any adjusting journal entry has been made. Based on prior experience the credit department estimates that 2.5% of sales are uncollectible. net sales for the year are $998,600. An aging analysis was also prepared and the aging result was $24,000. Prepare the appropriate journal entry to record uncollectible accounts expense if the Percentage of Net Sales method is used. Prepare the appropriate journal entry to record uncollectible accounts expense if the Accounts Receivable Aging method is used. Calculate the Allowance for Uncollectible Accounts ending balance if the Percentage of Net Sales Method was used. Calculate the Allowance for Uncollectibel Accounts ending balance if the Accounts Receivable Aging Method was used.

Answer 1

1	Net credit sale % method
	Net credit sale for the year	998600
	Estimated uncollectible balance	2.50%
	Total amount	24965
	Beginning balance	3100	Debit
	Bad debt expense	28065
	Bad debt expense	28065
	Allowance for doubt ful debt		28065
	Uncollectible accounts ending balance	24965
2	Aging method
	Beginning balance	3100	debit
	Allowance by aging method	24000	Credit
	Bad debt expense	27100
	Bad debt expense	27100
	Allowance for doubtful accounts		27100
	Uncollectible accounts ending balance	24000