Question

Use the following to answer questions 12 – 15 At December 31, KC Co reported accounts receivable of $75,000 and an allowance for uncollectible accounts of $400 (credit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 8% of accounts receivable. 12. $_ _Estimate the amount of uncollectible receivables: 13. $. __When recording the adjusting entry for bad debt expense how much should Allowance for Uncollectible accounts be credited? 14. On January 10, a customer's account balance of $100 is written off as uncollectible. Record the write-off. 15. $ _If Net Accounts receivable were $60,000 before the write-off, how much are Net Accounts receivable AFTER the write-off?

Answer 1

12.

Accounts receivables = $75,000

Estimated uncollectibles = 8% of Accounts receivables

= 75,000 x 8%

= $6,000

13.

Bad debt expense = Estimated balance of allowance for uncollectibles - Existing balance of Allowance for doubtful accounts

= 8,000 - 400

= $7,600

Allowance for uncollectibles should be credited by $7,600

14.

Journal

Jan. 10	Allowance for uncollectible accounts	100
	Accounts receivables		100

15.

Net Accounts receivables before write off = $60,000

Net Accounts receivables after write off will be $60,000 since due to write off both Accounts receivables and Allowance for uncollectible accounts will decrease by the amount of write off and thus net accounts receivables will remain same as before.

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