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
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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, and (b) Allowance for Uncollectible Accounts has a debit balance of $800 before adjustment.
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Answer:
Journal entry:
(a) credit balance in uncollectible accounts $800
Present estimate of uncollectible amount= $6700
Bad debts expense A/c dr. 5900
To Allowance for uncollectible accounts 5900
(Being recording the increase in uncollectible account estimate)
(b) debit balance in uncollectible accounts receivable:
Present estimate =$6700
Total estimate now becomes= $ (6700+800)= $7500
Bad debts expense A/c dr. 7500
To allowance for uncollectible accounts 7500.
