Answer:
Customer balances are written off in the amount of $11,300.
Dr Bad Debt Expense $ 11.300
Cr Accounts receivable $ 11.300
At the end of the period, bad debt expense is estimated to be $9,300.
Dr Bad Debt Expense $ 9.300
Cr Allowance for Uncollectible Accounts $ 9.300
Explanation:
Customer balances are written off in the amount of $11,300.
Dr Bad Debt Expense $ 11.300
Cr Accounts receivable $ 11.300
It's assumed that the company apllied the direct method to write off customer balances.
When the company report that customer balances are written off it means
that the company it's reporting a loss the income statement and less assets.
Dr Bad Debt Expense it's a loss account of the income statement, a debit to this account means a loss to the company.
The contra account it's the asset account "account receivable" that will have a negative impact becasue of the writte off.
At the end of the period, bad debt expense is estimated to be $9,300.
Dr Bad Debt Expense $ 9.300
Cr Allowance for Uncollectible Accounts $ 9.300
In this case the company make an estimation of losses for the customer account that maybe won't be collected, this estimation it's made over balances at the end of the year that impact in the current income statement.
The impact it's the same as before with the difference that it's an estimation, less asset and more losses in the income statement.
If the estimation are not met, the next year wont be necessary to report a new loss in the income statement, if some accounts are not collected it will be reported using the estimation balances.
