At the end of 2015, Murray State Lenders had a balance in its accounts receivables of $100,000 and Allowance for Uncolle...
At the end of 2015, Murray State Lenders had a balance in its accounts receivables of $100,000 and Allowance for Uncollectible Accounts of $4,500 (debit) before any adjustment. The company estimated that 12% of accounts receivables is uncollectible. Murray State's adjustment on December 31, 2015, to record its estimated uncollectible accounts included
(Please show work)
A. Credit to Allowance for Uncollectible Accounts of $12,000
B. Debit to Bad Debt Expense of $16,500; credit to Allowance for Uncollectible Accounts of $16,500
C. Credit to Allowance for Uncollectible Accounts of $7,500.
D. Debit to Bad Debt Expense of $7,500; credit to Allowance for Uncollectible Accounts of $7,500.
Homework Answers
Correct answer-------------B. Debit to Bad Debt Expense of $16,500; credit to Allowance for Uncollectible Accounts of $16,500
Working
| Estimated balance of allowance for uncollectables | $ 12,000.00 | Cr |
| Add: Unadjusted Balance in Allowance for uncollectable account (Dr) | $ 4,500.00 | Dr |
| Total bad debts to be recorded | $ 16,500.00 | Cr |
Entry will be recorded as follows
| No | General Journal | Debit | Credit |
| (b) | Bad debts expense | $ 16,500.00 | |
| Allowance for doubtful accounts | $ 16,500.00 | ||
| (To record bad debts expense) |
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