Question

At the end of 2018, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (credit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method. Murray State's adjustment on December 31, 2018, to record its estimated uncollectible accounts included a:

Answer 1

Explanation:

The journal entry to record the estimated uncollectible accounts is shown below:

Bad debt expense Dr $7,500

      To Allowance for uncollectible accounts       $7,500

(Being the bad debt expense is recorded)

The computation is shown below:

= Estimated amount for uncollectible accounts - credit balance in allowance for uncollectible accounts

= $12,000 - $4,500

= $7,500