Homework Answers
| Here, we will make the Allowance for uncollectible based on accounts receivable. | ||
| The entry for creating the Allowance is : | ||
| Bad debt | Debit | |
| Allowance for Uncollectible Accounts | Credit | |
| So, uncollectible account usually has Credit balance. Its utilisation entry is: | ||
| Allowance for Uncollectible Accounts | Debit | |
| Accounts Receivable | Credit | |
| In our case we have over utilised the Allowance for Uncollectible Accounts, because the balance is Debit $400. | ||
| Balance at the end required | 80000*4% | |
| $3,200.00 | Credit | |
| Current balance | $400 | Debit |
| Therefore current year bad debt expenses in Income statement | $3,600 | |
| Correct option | D: $3600 |
I hope you find it well explanatory. Still in case of any query, leave a comment.
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