22. The Company had a $5000 balance in the allowance account at 1/1/15. During 2

Question

22. The Company had a $5000 balance in the allowance account at 1/1/15. During 2015, they wrote off $23,000 of accounts receivable. Credit sales during 2015 were $1,200,000. 2% of credit sales are deemed uncollectible. What is the balance in the allowance account at 12/31/15? Know what will affect the account receivable account and the allowance account. Be able to make journal entries for bad debt expense and the write off of accounts receivable. If an account is written and then subsequently paid, know what the journal entry is.

Explanation / Answer

Ans:

Balance in allowance account:

=2% of credit sales

= 2%0*$1200000

= $24000

Under allowance method:

Write off uncollectible accounts, bad debt subsequently recovered affect receivable and allowance account.

Journal entry:

1.       Wrote off account receivable

Dr. Allowance for Doubtful

Cr. Account Receivable

2.       Recovery of bad debt :

Dr. Account Receivable

Cr. Allowance for Doubtful

Dr. Bank

Cr. Account Receivable

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.