Answer:
What journal entry did Pincus record to write off uncollectible accounts during 2021
Dr Allowance for Uncollectible Accounts $ 6,300
Cr Accounts receivable $ 6,300
What journal entry did Pincus record to recognize bad debt expense for 2021?
Dr Bad Debt Expense $ 8,040
Cr Allowance for Uncollectible Accounts $ 8,040
Explanation:
Pincus provided a total of $156,000 of services on account.
Dr Accounts receivable $ 156,000
Cr Sales $ 156,000
In 2021, the company wrote off uncollectible accounts of $6,300
Dr Allowance for Uncollectible Accounts $ 6,300
Cr Accounts receivable $ 6,300
By the end of 2021, cash collections on accounts receivable totaled $132,300.
Dr Cash $ 132,300
Cr Accounts receivable $ 132,300
Balances on Accounts 31.12.2012 before adjustment
Accounts receivable CREDIT $ 17,400
Allowance for Uncollectible Accounts DEBIT $ 6,300
Pincus estimates that 10% of the accounts receivable balance at 12/31/2021 will prove uncollectible.
Dr Bad Debt Expense $ 8,040
Cr Allowance for Uncollectible Accounts $ 8,040
If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of estimated value.
Because the company already has a DEBIT balance ($6,300) in the Allowance for Doubtful Accounts it's necessary to register an entry that COMPLEMENT ($8,040) the existing value and reflect the value estimated as bad debts ($1,740).
Bad Debt Expense = $8,040 - $6,300 = $1,740
It's necessary to reflect $1,740 in the Allowance for Uncollectible Accounts as Credit, so we need an entry of $8,040.
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