Question

Warner Company's year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 0.5% of sales.
Prepare the December 31 year-end adjusting entry for uncollectibles.

Answer 1

Explanation:

The journal entry to record the uncollectible is shown below:

On December 31

Bad debt expense $800

        To Allowance for doubtful debts $800

(Being the bad debt expense is recorded)

The computation is shown below:

= Sales × estimated percentage - credit balance of doubtful accounts

= $280,000 × 0.5% - $600

= $1,400 - $600

= $800