Answer:
The adjusting entry for uncollectible accounts as of December 31:
Debit Bad debts expense $68,550
Credit Allowance for doubtful accounts $68,550
Explanation:
Estimated uncollectible = $892,000 x 3/4% + $285,000 x 1% + $101,000 x 8% + $63,000 x 16% + $43,100 x 50% + $17,700 x 80% = $6,690 + $2,850 + $8,080 + $10,080 + $21,550 + $14,160 = $63,410
The company uses aging of accounts receivable to estimate uncollectible. The allowance for doubtful accounts had a debit balance of $5,140 as of December 31.
Bad debts expense = $63,410 + $5,140 = $68,550
The adjusting entry for uncollectible accounts:
Debit Bad debts expense $68,550
Credit Allowance for doubtful accounts $68,550
