Joshua company had the following information in 2016. Accts Rec 12/31/16.....$15
ID: 2342755 • Letter: J
Question
Joshua company had the following information in 2016.
Accts Rec 12/31/16.....$15000
Allowance for uncollected account 12/31/16 (before adjustment).....$950
credit service revenue during 2016.....$45000
Cash service revenue during 2016.....$15000
Collections from customers on account during 2016.......$45000
If uncollectible accounts are determined by the aging-of-receivables method to be $ 1 240, the uncollectible account expense for 2016 would be $ 290. Using the aging-of-receivables method, the balance of the Allowance account after the adjusting entry at year-end 2016 would be
Explanation / Answer
Answer
>Unadjusted balance in Allowance account = $ 950 Credit
>Adjusted balance of Allowance account required as per ‘aging of receivables’ method = Uncollectible accounts determined = $ 1,240
>Uncollectible account expense for 2016 given = $ 290 [which is calculated as $ 1240 - $950]
> The adjustment entry would have been:
Accounts title
Debit
Credit
Uncollectible account expense
$ 290.00
Allowance for Uncollectible expense
$ 290.00
Adjusted balance of Allowance account = Old Balance + Amount by which Allowance account is credited in the adjusting entry.
= $ 950 + $ 290
= $ 1,240 Credit = Answer = Balance of Allowance account after adjusting entry.
Accounts title
Debit
Credit
Uncollectible account expense
$ 290.00
Allowance for Uncollectible expense
$ 290.00
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