Question

Warner Company’s year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable. 1. Prepare the December 31 year-end adjusting entry for uncollectibles.

Answer 1

Answer:

bad debt expense 885 debit

allowance for doubtful accounts 885 credit

Explanation:

expected uncollectibles

1.5% of AR = 99,000 x 1.5% = 1,485

current balance credit            (600)

Adjustment                              885

When calculating over account receivable, we stimated the allowance so we have to adjsut for the diference.