Question

Physicians' Hospital has the following balances on December 31, 2021, before any adjustment: Accounts Receivable =$ 60,000; Allowance for Uncollectible Accounts =$ 1,100 (credit). On December 31, 2021, Physicians' estimates uncollectible accounts to be 15 % of accounts receivable.

Required:

1. Record the adjusting entry for uncollectible accounts on December 31, 2021 . (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

2. Determine the amount at which bad debt expense is reported in the income statement and the allowance for uncollectible accounts is reported in the balance sheet.

3. Calculate net accounts receivable.

Answer 1

a) Journal entry

date	account and explanation	debit	credit
	bad debt expense (60000*15%-1100)	7900
	Allowance for doubtful accounts		7900

b) Bad debt expense = 7900

Allowance for doubtful accounts = 60000*15% = 9000

c) Balance sheet presentation

Account receivable	60000
Less: Allowance for doubtful accounts	-9000
Net account receivable	51000