Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable. 1. Prepare the December 31 year-end adjusting entry for uncollectibles.

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Business

Tess

19 July, 10:43

Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable. 1. Prepare the December 31 year-end adjusting entry for uncollectibles.

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Sandy · Answer 1

bad debt expense 885 debit

allowance for doubtful accounts 885 credit

Explanation:

expected uncollectibles

1.5% of AR = 99,000 x 1.5% = 1,485

current balance credit (600)

Adjustment 885

When calculating over account receivable, we stimated the allowance so we have to adjsut for the diference.