At the end of the year, a company has a balance in Allowance for Uncollectible Accounts of $2,000 (credit) before any year-end adjustment. The balance of Accounts Receivable is $180,000. The company estimates that 5% of accounts receivable will not be collected over the next year.
Record the adjustment for uncollectible accounts. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
| Event | General Journal | Debit | Credit |
| 1 | Bad debts expense | $ 7,000.00 | |
| Allowance for doubtful accounts | $ 7,000.00 | ||
| (To record bad debts expense) |
Working
| Estimated balance of allowance for uncollectables (180000 x 5%) | $ 9,000.00 | Cr |
| Balance in Allowance for uncollectable account (Cr) | $ 2,000.00 | Cr |
| Total bad debts to be recorded | $ 7,000.00 | Cr |
| Account | Debit | Credit |
| Bad debts expense | 7,000 | |
| Allowance for Doubtful Accounts | 7,000 | |
| (180,000*5%) - 2000 |
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At the end of the year, a company has a balance in Allowance for Uncollectible Accounts...