Question

6 On December 31, 2019, before adjusting entries, the balances of selected accounts of the Battlefield Equipment Company were as follows: Accounts Receivable $924,000 Allowance for uncollectible accounts (debit balance) 2,400 dr. Skloped The company has determined that historically about 3.4 percent of accounts receivable are never collected and use this basis to determine its bad debts provision. Compute the estimated amount of uncollectible accounts and prepare the journal entry to record the company's estimated loss from uncollectible accounts on December 31. Complete this question by entering your answers in the tabs below. Uncollect Accounts General Journal Compute the estimated amount of uncollectible accounts. (Round your "Estimated uncollectible rate" to 3 decimal places, i.e. 1.2% should be entered as 0.012.) Accounts receivable Estimated uncollectible account rate Estimated uncollectible accounts $ 0 Adjustment amount General Journal >

Answer 1

Under the allowance method of uncollectible Accounts the balance is given as a percentage of Accounts receivable, so to arrive at the balance of allowance of uncollectible Accounts as a percentage the adjustment in the existing balance is made and actual closing is taken.

Here the balance of the allowance of uncollectible Accounts is debit of $ 2400,

But the closing balance required for the allowance for uncollectible Accounts =Accounts receivable × Rate .

Closing balance of allowance for uncollectible Accounts = $ 924,000 × 3.4% = $ 31,416.

So the adjustment = Closing Balance required + Existing debit balance = $ 31,416 + $ 2400 = $ 33,816.

Accounts receivable	924,000
Estimated uncollectible Accounts rate	0.034
Estimated uncollectible Accounts	31,416
Allowance for uncollectible ending balance (debit)	2400
Adjustment Amount	33,816

To record the provision for uncollectible Accounts, the baddebts Expenses or uncollectible Accounts Expenses will be debited by $ 33816 and allowance for uncollectible Accounts will be credited by $ 33816.

The required journal entry be :

Date	General Journal	Debit	Credit
Dec 31, 2019	Uncollectible Accounts Expenses / Baddebts Expenses	33,816
	Allowance for uncollectible Accounts		33,816
	( To record provision for uncollectible Accounts)

Feel free to comment doubts if any..