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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.

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Answer #1

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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