Question

At the end of the year the unadjusted balances of Angel Provisions included the following accounts: Sales $ 880,575 Accounts Receivable $ 111,475 Allowance for Doubtful Accounts $ 1,718 (a.) If Angel uses the balance sheet approach to estimate uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $6,075: What will the uncollectible accounts expense for the year be

Answer 1

Answer:

The uncollectible accounts expense for the year be $6,075 - $1,718 = $4,357 and the required journals are:

Debit Bad debt expense                                     $4,357

Credit Allowance for doubtful accounts            $4,357

(To record bad debt expense for the year)

Explanation:

If all the sales were assumed to be sold on credit to the tune of $880,575, the accounts receivable would increase by that amount and the required journals are:

Debit Accounts receivable                            $880,575

Credit Sales revenue                                     $880,575

(To record sales transactions on account)

Balance in Accounts Receivable is therefore $111,475 + $880,575 = $992,050 while its cash realizable value will be $992,050 - $6,075 = $985,975.