Question

Sanders Inc. is a small brick manufacturer that uses the direct write-off method to account for uncollectible accounts. At the end of 2021, its balance for Accounts Receivable is $32,000. The company estimates that of this amount, $3,700 is not likely to be collected in 2022. In 2022, the actual amount of bad debts is $2,600.
Record, if necessary, an adjustment for estimated uncollectible accounts at the end of 2021 and the actual bad debts in 2022. (If no entry is required for a transaction/event, indicate "No journal entry required".)

Answer 1

Answer:

JOURNAL ENTRIES

Dr. Bad Debts.......................3,700

Cr. Accounts Receivable.............3,700

Explanation:

an adjustment for estimated uncollectible accounts at the end of 2021

JOURNAL ENTRIES

Dr. Bad Debts.......................3,700

Cr. Accounts Receivable.............3,700

for the actual bad debts in 2022. we have adjust for the difference between the estimate and the actual amount which is $1,100

JOURNAL ENTRIES

Dr. Accounts receivable...(3700-2600)...1,100

Cr. Bad debts recovered.....................................1,100

Being bad debts recovered, a shortfall in actual estimates