Answer:
None of these
what would be the correct answer choice?
- Assuming 5% of outstanding accounts receivable, the journal entry:
Dr Bad Debt Expense $ 6.320
Cr Allowance for Uncollectible Accounts $ 6.320
Explanation:
If the company applies the allowance method, it means that the account
Allowance for Uncollectible Accounts must show as balance the 5% of outstanding receivables as debit.
Because the company has a credit balance in that account it's necessary to register an entry that compensate the value as credit and reflect as debit the value estimated as 5% of account receivable.
Dr Accounts Receivable $ 107,000
Dr Allowance for Uncollectible Accounts $ 970
- The journal entry adjustment will be:
Dr Bad Debt Expense $ 6,320
Cr Allowance for Uncollectible Accounts $ 6,320
Dr Accounts Receivable $ 107,000
Cr Allowance for Uncollectible Accounts $ 5,350
