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svet-max [94.6K]
3 years ago
9

At the end of the year, a company has a balance in Allowance for Uncollectible Accounts of $2,200 (credit) before any year-end a

djustment. The balance of Accounts Receivable is $190,000. 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.)
Business
1 answer:
Lapatulllka [165]3 years ago
3 0

Answer: Debit Bad debt expense $7,300; Credit Allowance for doubtful accounts $7,300.

Explanation: 5% of accounts receivable of $190,000 is $9,500. Remember the credit balance in Allowance for uncollectible accounts is $2,200 prior to any adjustment and this reports to the balance sheet. To reinstate this account to the required provision for uncollectible amount of $9,500, we need to adjust for the difference (that is, $9,500 minus $2,200 existing balance), which is $7,300. <u>Then, the entries above would be recorded. </u>

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3 years ago
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