Question

lem 2. At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and net sales for the year total $2,500,000. Using the aging method (analysis of receivables), the proper balance of Allowance for Doubtful Accounts is estimated as $25,000. Determine the amount of the adjusting entry for uncollectible accounts and journalize the entry.

Answer 1

ANSWER=

Accounts receivable is the sum owed to an organization in lieu of the products or services provided by the company on credit basis to customer. Accounts receivables are the part of the current assets of the company as they can be convertible into cash within a short period of 12 month.

a) Calculation the amount of Adjusting entry for Uncollectible accounts as follows-

=$25000+$5500

=$30500

b) Journal Entry -

1) For opening credit balance of allowance for bad doubtful account(Bad debt)-

= UNCOLLECTABLE ACCOUNT A/C DR. $5500

TO ALLOWANCE FOR DOUBTFUL A/C- $5500

2) For  Provision made for current year-

= UNCOLLECTABLE ACCOUNT A/C DR. $25000   

TO ALLOWANCE FOR DOUBTFUL A/C- $25000

3) For recording the credit losses to Account Receivable made uncollectable-

=ALLOWANCE FOR DOUBT DEBT A/C DR. $30500

TO ACCOUNT RECEIVABLE A/C $30500