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22 March, 23:07

The Company's year-end unadjusted trial balance shows accounts receivable of $104,000, allowance for doubtful accounts of $650 (credit), and sales of $330,000. Uncollectibles are estimated to be 1.50% of accounts receivable. 1. Prepare the December 31 year-end adjusting entry for uncollectibles.

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  1. 23 March, 03:03
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    See explanation section

    Explanation:

    December 31 Bad debt expense Debit $910 (Note-1)

    Allowance of doubtful accounts Credit $910

    As the Uncollectibles are estimated to be 1.50% of accounts receivable, total uncollectibles are = $104,000 * 1.50% = $1560.

    As the Allowance of doubtful accounts is a contra-entry (Credit side) and has a positive balance of $650, we have to reduce that $650 from $1,560 to adjust the income statement balance.
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Home » Business » The Company's year-end unadjusted trial balance shows accounts receivable of $104,000, allowance for doubtful accounts of $650 (credit), and sales of $330,000. Uncollectibles are estimated to be 1.50% of accounts receivable. 1.
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