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5 January, 17:55

Southwest Pediatrics has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $121,000; Allowance for Uncollectible Accounts = $2,100 (debit). On December 31, 2021, Southwest estimates uncollectible accounts to be 20% of accounts receivable. Required: 1. Record the adjusting entry for uncollectible accounts on December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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  1. 5 January, 19:23
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    Bad debt expense $ 26,300

    Allowance for Uncollectible Accounts $ 26,300

    Explanation:

    Initial Balance

    Accounts Receivable $ 121,000

    Allowance for Uncollectible Accounts $ 2,100 - Debit

    Bad Debts Expense = 20% / Accounts Receivable $ 24,200

    Adjusting Entry

    Bad debt expense $ 26,300

    Allowance for Uncollectible Accounts $ 26,300

    Final Balance

    Accounts Receivable $ 121,000

    Allowance for Uncollectible Accounts $ 24,200 - Credit

    Accounts Uncollectible are those credit that the company give and there are not chances of been collected.

    When the customers buy products on credits but then the company can't collect the debt, then it's necessary to write off the unpaid bill as uncollectible

    One way it's to write-off directly the bad debts at the moment decided that the credit are uncollectible, the total amount it's reported as bad debt expenses which affect negativly the income statement and the accounts receivable are reduce in the same amount, less assets.

    The other way it's to determine a percentage of total amount of accounts receivables as uncollectible, exist many ways to analize the accounts receivable and figure the value of uncollectible.

    When the company have the percentage of uncollectible accounts the journal entry required is Bad Expenses (debit) with Allowance for Uncollectible Accounts (credit)

    At the moment of the write-off as the expenses were before recognized we only use the Allowance for Uncollectible Accounts (Debit) with Accounts Receivable (Credit), with this we are recognizing the uncollectible credit of the company.
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