Question

at the end of the first year of operations, gaur manufacturing had gross accounts receivable of $251,000. gaur's management estimates that 6% of the accounts will prove uncollectible. what journal entry should gaur record to establish an allowance for uncollectible accounts?

Answer 1

The journal entry to establish an allowance for uncollectible accounts is as follows

Bad debt expense A/c Dr  $15,060

 To Allowance for doubtful debts  $15,060

(Being bad debt allowance recorded)

The bad debt expense is calculated as shown below, as 6% of the accounts are proven uncollectible.

$251,000x 6/100

$2510x 6

=$15,060

In order to make the proper posting, we debited the bad debt expense and credited the allowance for doubtful debts account.

A bad debt expense is recognized when a receivable is no longer collectable as a result of a customer's inability to pay an outstanding debt due to bankruptcy or other financial troubles.

To know more about bad debt  refer here:

brainly.com/question/28993708#

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