Question

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 2. What amount would have been used in the year end adjusting entry if the allowance account had a year-end unadjusted debit balance of $300?

Answer 1

Answers:

Journal Entry

1.

General Journal	Debit	Credit
Bad Debts Expense	$885
Allowance for Doubtful Accounts		$885

Bad Debts Expense = ($99000*1.5%) - 600 = $885

2. Amount used in Year End Adjisting Entry is = $1785

= ($99000*1.5%) + $300

= $1485 +$300

= $1785