Answer:
Journal
Date Account Titles and Explanation Debit Credit
Allowance for uncollectible accounts $30,500
Accounts Receivables $30,500
(To write off uncollectibles during the year)
Journal
Date Account Titles and Explanation Debit Credit
Account receivables $3,100
Allowance for uncollectible accounts $3,100
(To reinstate receivables written off earlier)
Journal
Date Account Titles and Explanation Debit Credit
Cash $3,100
Account receivables $3,100
(To record the recovery of bad debts)
Journal
Date Account Titles and Explanation Debit Credit
Bad debt expenses $48,000
Allowance for uncollectible accounts $48,000
(To record bad debts expenses)
<u>Workings</u>
Closing allowance = Opening allowance - Receivables written off + Receivables reinstated = $51,000 - $30,500 + $3,100 = $23,600
Expenses Bad debt = Receivables at the end of 2016 * Estimated percentage = $720,000 * 10% = $72,000
Allowance to be created = Estimated bad debts - Balance of Allowance at year end = $72,000 - $23,600 = $48,400
