Answer:
1. Estimate the appropriate 12/31/2021 balance for Dhaliwal’s allowance for uncollectible accounts.
$19,905 credit balance
2. What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts?
December 31, 202x, adjustment of bad debt expense
Dr Bad debt expense 45,605
Cr Allowance for uncollectible accounts 45,605
= $19,905 + $25,700 = $45,605
Explanation:
Accounts not yet due = $104,000; estimated uncollectible = 15%. ⇒ bad debt = $104,000 x 15% = $15,600
Accounts 1–45 days past due = $14,400; estimated uncollectible = 20%. bad debt = $14,400 x 20% = $2,880
Accounts more than 45 days past due = $5,700; estimated uncollectible = 25%. bad debt = $5,700 x 25% = $1,425
total bad debt expense = $15,600 + $2,880 + $1,425 = $19,905
