Question

At the end of the year, a company has the following accounts receivable and estimates of uncollectible accounts: Accounts not yet due = $89,000; estimated uncollectible = 2%. Accounts 1-30 days past due = $29,000; estimated uncollectible = 25%. Accounts more than 30 days past due = $8,000; estimated uncollectible = 55%. Record the year-end adjustment for uncollectible accounts, assuming the current balance of the Allowance for Uncollectible Accounts is $810 (credit). (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

• Adjustment entry would be:

Accounts title	Debit	Credit
Bad Debt Expense [or Uncollectible account expense]	$12,620
Allowance for Uncollectible account		$12,620

• Working

Number of Days	Receivables
Past Due	Amount	% uncollectible	Uncollectible amount
Note due	$89,000	2%	$1,780
0-30	$29,000	25%	$7,250
More than 30 days	$8,000	55%	$4,400
Adjusted balance required of Allowance for Doubtful Account (A)			$13,430
Unadjusted balance in the Allowance account (B)			$810
Uncollectible account expense for Year 2: (A - B)			$12,620