Estimated that uncollectible-account expense for the year was 2% on credit sales

Question

Estimated that uncollectible-account expense for the year was 2% on credit sales of $750,000 and recorded that amount as expenses. Made the closing entry for uncollectible-account expense. Sold inventory to Marian Holt, $4,500 on account. Ignore cost of goods sold. Wrote off Marian Holt's account as uncollectible after repeated efforts to collect from her. Received $900 from Marian Holt, along with a letter stating her intention to pay within 30 days. Reinstated Holt's a count in full. Received the balance due from Marian Holt. Made a compound entry to write off the following accounts as uncollectible Kaycee Britt, $900; Tim Sands, $700; and Anna Chin, $1,400. Estimated that uncollectible-account expense for the year was 2% on credit sales of $885,000 and recorded the expenses. Made the closing entry for uncollectible-account expense.

Explanation / Answer

20X1 DR CR Adjusting Entry Dec-31 Bad Debts Expense 15000 Allowance for Doubtful Accounts 15000 Closing Entry Dec-31 Income Summary 15000 Bad Debts Expense 15000 20X2 Feb-04 Account receivable 4500 Sales 4500 Jul-01 Allowance for Doubtful Accounts 4500 Account receivable 4500 Oct-19 Account receivable 900 Allowance for Doubtful Accounts 900 Oct-19 Cash 900 Account receivable 900 Nov-15 Account receivable 3600 Allowance for Doubtful Accounts 3600 Nov-15 Cash 3600 Account receivable 3600 Dec-31 Allowance for Doubtful Accounts 3000 Account receivable Kaycee ritt 900 Account receivable Tim Sands 700 Account receivable Anna Chin 1400 Dec-31 Bad Debts Expense 17700 Allowance for Doubtful Accounts 17700 885000*.02 Income Summary 17700 Bad Debts Expense 17700

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