Question

At the end of the year, a company has a balance in Allowance for Uncollectible Accounts of $2,000 (debit) 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.) View transaction list Journal entry worksheet Record the adjustment for uncollectible accounts. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

Answer

• Step #1: Adjusted balance required in Allowance account = $ 180000 accounts receivables x 5% = $ 9000 Credit
• Step #2: Unadjusted balance existing in Allowance account = $ 2000 Debit
• Step #3: Bad Debt Expense = Adjusted balance required – Credit balance existing + Debit balance existing
  = $ 9000 - $ 0 + $ 2000
  = $ 11,000

Event	General Journal	Debit	Credit
1	Bad Debt Expense (or Uncollectible account expense)	$11,000
	Allowance for Uncollectible accounts		$11,000
	(to record bad debt expense)