The credit manager of Montour Fuel has gathered the following information about

Question

The credit manager of Montour Fuel has gathered the following information about the company's accounts receivable and credit losses during the current year: Net credit sales for the year Accounts receivable at year-end Uncollectible accounts receivable: $ 8,500,000 1,750,000 Actually written off during the year Estimated portion of year-end receivables expected to prove uncollectible (per aging schedule) $ 89,000 84,000 173,000 a. Uncollectible accounts expense is estimated at an amount equal to 2.5 percent of net credit sales. b. Uncollectible accounts expense is recognized by adjusting the balance in the Allowance for Doubtful Accounts to the amount indicated in the year-end aging schedule. The balance in the allowance account at the beginning of the current year was $25,000. (Consider the effect of the write-offs during the year on the balance in the Allowance for Doubtful Accounts) c. The company uses the direct write-off method of accounting for uncollectible accounts. Prepare one journal entry summarizing the recognition of uncollectible accounts expense for the entire year under each of the above independent assumptions. (If no entry is required for a transaction/event, set "No Journal entry required" in the first account field.)

Explanation / Answer

in transaction A uncollectible accounts expenses are 2.5% of 8,500,000 which comes out to be 212,500 not 21,250!

and in transaction try ACCOUNTS PAYABLE in credit entry and try puting amount 173,000

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