Question

At the end of the year, a company has a balance in Allowance for Uncollectible Accounts of $3,100 (credit) before any year-end adjustment. The balance of Accounts Receivable is $235,000. The company estimates that 5% of accounts receivable will not be collected over the next year.

Record the adjustment for uncollectible accounts. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Solution

Date	General Journal	Debit	Credit
Dec 31	Bad debts expense	$                8,650
	Allowance for doubtful accounts		$         8,650.00
	(To record bad debts expense)

Working

Estimated balance of allowance for uncollectables (235000 x 5%)	$      11,750.00	Cr
Less: Balance in Allowance for uncollectable account (Cr)	$        3,100.00	Cr
Total bad debts to be recorded	$        8,650.00	Cr