Question

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried...

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $63,400 and $1,300, respectively. During Year 2, Kincaid reported $152,000 of credit sales, wrote off $1,200 of receivables as uncollectible, and collected cash from receivables amounting to $161,300. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.
What effect will the entry to recognize the uncollectible accounts expense for Year 2 have on the elements of the financial statements?

Homework Answers

Answer #1
Accounts Receivables
Beginning Balance 63400
Add: Credit Sales 152000
Less: Collections -161300
Less: Written off -1200
Closing Balance 52900
Allowance for bad debts
Beginning 1300
Estimated 1% of credit sales 1520
Less: Written off -1200
Closing Balance 1620
General Journal Debit Credit
Bad Debts Exp. (1%* credit sales) 1520
Allowance for Uncollectible accounts 1520
(To record allowance for uncollectible accounts)
Allowance for Uncollectible accounts 1200
Accounts Receivable 1200
(To record bad debts written off)
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