During 2016, Irving Company earned $250,000 of service revenue on account. Irvin

Question

During 2016, Irving Company earned $250,000 of service revenue on account. Irving Company estimated 2016 uncollectible accounts expense to be 1.5% of its 2016 sales revenue on account. Which of the following is the correct general journal entry to record this adjustment assuming Irving Company uses the allowance method for accounting for uncollectible accounts?

a.

b.

c.

d.

During 2016, Irving Company earned $250,000 of service revenue on account. Irving Company estimated 2016 uncollectible accounts expense to be 1.5% of its 2016 sales revenue on account. Which of the following is the correct general journal entry to record this adjustment assuming Irving Company uses the allowance method for accounting for uncollectible accounts?

a.

Debit Credit   Uncollectible Accounts Expense 3,750        Accounts Receivable 3,750

b.

Debit Credit   Uncollectible Accounts Expense 3,750        Allowance for Doubtful Accounts 3,750

c.

Debit Credit   Allowance for Doubtful Accounts 3,750        Uncollectible Accounts Expense 3,750

d.

Debit Credit   Accounts Receivable 3,750        Uncollectible Accounts Expense 3,750

Explanation / Answer

Answer is B

As uncollectible expense will be charged and provision is created therefore entry at B is correct.

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