Answer:
The correct entry is shown below:
Explanation:
The journal entry to record the estimated balance of uncollectible accounts is as:
Bad debt expense A/c...............................................Dr $16,500
Allowance for Uncollectible Accounts A/c................Cr $16,500
Being the estimated amount of uncollectible accounts is recorded
The bad debt expense account is debited as there is increase in the expense so any increase in expense is debited, whereas the allowance for uncollectible accounts also increases which is credited.
Working Note:
Amount of uncollectible accounts which is estimated = Future uncollectible accounts + Debit balance of Allowance for Uncollectible Accounts
where
Future uncollectible accounts amounts to $12,500
Debit balance of Allowance for Uncollectible Accounts amounts to $4,500
Putting the values above:
Amount of uncollectible accounts which is estimated = $12,500 + $4,500
Amount of uncollectible accounts which is estimated = $16,500
