question archive Security Service Company's Accounts Receivable account shows a debit balance of $104,000 at the end of the year
Security Service Company's Accounts Receivable account shows a debit balance of $104,000 at the end of the year
Subject:AccountingPrice:2.87 Bought7
Security Service Company's Accounts Receivable account shows a debit balance of $104,000 at the end of the year. An aging analysis of the individual accounts indicates estimated uncollectible accounts to be $6,700. Prepare the journal entry to record the uncollectible accounts expense under each of the following independent assumptions:
a. Allowance for Uncollectible Accounts has a credit balance of $800 before adjustment.
b. Allowance for Uncollectible Accounts has a debit balance of $800 before adjustment.
What is the balance of Allowance for Uncollectible Accounts after each of these adjustments?
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer:
Journal entries:
| a. | Bad debt expense ($6,700 - $800) | 5,900 | |
| Allowance for Uncollectible Accounts | 5,900 | ||
| b. | Bad debt expense ($6,700 + $800) | 7,500 | |
| Allowance for Uncollectible Accounts | 7,500 |
The balance of Allowance for Uncollectible Accounts after each of the adjustments will be $6,700.
Explanation:
Since the amount of estimated uncollectibles based on the aging analysis is $6,700, that is what the balance in the Allowance for Uncollectible Accounts must be. The journal entries for the bad debt expense are passed for such amounts that ensure that the Allowance for Uncollectible Accounts has the required balance of $6,700.
