Warner Company's year-end unadjusted trial balance shows accounts receivable of $113,000, allowance for doubtful accounts of $740 (credit), and sales of $420,000. Uncollectibles are estimated to be 1.50% of accounts receivable.

1. Prepare the December 31 year-end adjusting entry for uncollectibles.

2. What amount would have been used in the year-end adjusting entry if the allowance account had a year-end unadjusted debit balance of $1,000?

Question

Business

Madyson

8 November, 08:24

Warner Company's year-end unadjusted trial balance shows accounts receivable of $113,000, allowance for doubtful accounts of $740 (credit), and sales of $420,000. Uncollectibles are estimated to be 1.50% of accounts receivable.

1. Prepare the December 31 year-end adjusting entry for uncollectibles.

2. What amount would have been used in the year-end adjusting entry if the allowance account had a year-end unadjusted debit balance of $1,000?

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Answers (1)

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Hobbes · Answer 1

The answer is given below;

Explanation:

1 - Allowance for doubtful accounts $113,000*1.5%=$1,695

Allowance for doubtful accounts-opening = ($740)

Bad Debt Expense for the year $955

Bad Debt Expense Dr.$955

Accounts Receivable Cr.$955

2. Bad Debt Expense=$1,695+1,000) = $2,695

Bad Debt Expense Dr.$2,695

Accounts Receivable Cr.$2,695