Security Service Company\'s Accounts Receivable account shows a debit balance of
ID: 2569668 • Letter: S
Question
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 accountsto 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.
To record estimated uncollectible accounts expense
b. Allowance for Uncollectible Accounts has a debit balance of $800 before adjustment.
To record estimated uncollectible accounts expense
What is the balance of Allowance for Uncollectible Accounts after each of these adjustments?
$
a. Allowance for Uncollectible Accounts has a credit balance of $800 before adjustment.
To record estimated uncollectible accounts expense
Explanation / Answer
Answer a Bad debt expense = Estimated uncollectible accounts - credit balance in Allowance for Uncollectible accounts = $6700 - $800 = $5900 The journal entry to record the uncollectible accounts expense Date Account Titles Debit Credit Bad debt expense $5,900 Allowance for Uncollectible Accounts $5,900 (To record estimated uncollectible accounts expense) Answer b Bad debt expense = Estimated uncollectible accounts + Debit balance in Allowance for Uncollectible accounts = $6700 + $800 = $7500 The journal entry to record the uncollectible accounts expense Date Account Titles Debit Credit Bad debt expense $7,500 Allowance for Uncollectible Accounts $7,500 (To record estimated uncollectible accounts expense) The balance of Allowance for Uncollectible Accounts after each of these adjustments = $6700
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