Answer:
- Prepare the entry to record bad debt expense.
- Assume that 11% of accounts receivable will prove to be uncollectible.
Dr Bad Debt Expense $ 25,203
Cr Allowance for Uncollectible Accounts $ 25,203
- Assume Larkspur prepares an aging schedule that estimates total uncollectible accounts at $25,600.
Dr Bad Debt Expense $ 22,190
Cr Allowance for Uncollectible Accounts $ 22,190
Explanation:
At December 31, 2017, before adjusting entries, the balances in selected accounts were
Net sales $ 1,475,200
Dr Accounts receivable $ 212,500
Dr Allowance for Uncollectible Accounts $ 1,828
Assume that 11% of accounts receivable will prove to be uncollectible.
Prepare the entry to record bad debt expense.
Dr Bad Debt Expense $ 25,203
Cr Allowance for Uncollectible Accounts $ 25,203
Because the company already has a DEBIT balance ($1,828) in the Allowance for Doubtful Accounts it's necessary to register an entry that COMPENSATE ($25,203) the existing value and reflect the value estimated as bad debts ($23,375).
Bad Debt Expense = $212,500 * 0,11 = $23,375
It's necessary to reflect this in the Allowance for Uncollectible Accounts as Credit, so we need an entry of $25,203
Bad Debt Expense = $23,375 + $1,828 = $25,203
Balances in Accounts Receivable $212,500 debit, and Allowance for Doubtful Accounts $3,410 credit.
Cr Allowance for Uncollectible Accounts $ 3.410
Assume Larkspur prepares an aging schedule that estimates total uncollectible accounts at $25,600. Prepare the entry to record bad debt expense
Dr Bad Debt Expense $ 22,190
Cr Allowance for Uncollectible Accounts $ 22,190
Because the company already has a CREDIT balance ($3,410) in the Allowance for Doubtful Accounts it's necessary to register an entry that COMPLEMENT ($22,190) the existing value and reflect the value estimated as bad debts ($25,600).
Bad Debt Expense = $25,600 - $3,410 = $22,190
It's necessary to reflect $25,600 in the Allowance for Uncollectible Accounts as Credit, so we need an entry of $22,190.
