Question

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $66,200 and $1,900, respectively. During Year 2, Kincaid reported $166,000 of credit sales, wrote off $1,400 of receivables as uncollectible, and collected cash from receivables amounting to $185,700. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. Which of the following describes the effects of Kincaid’s entry to recognize the write-off of the uncollectible accounts?

Answer 1

Answer:

Which of the following describes the effects of Kincaid’s entry to recognize the write-off of the uncollectible accounts?

Dr Allowance for Uncollectible Accounts $ 1.400

Cr Accounts Receivable  $ 1.400

Explanation:

• January 1 Year 2  

Dr Accounts Receivable  $ 66,200

Cr Allowance for Doubtful Accounts $ 1,900

 

• Kincaid reported $166,000 of credit sales  

Dr Accounts Receivable  $ 166,000

Cr SALES $ 166,000

• Wrote off $1,400 of receivables as uncollectible  

Dr Allowance for Uncollectible Accounts $ 1,400

Cr Accounts Receivable  $ 1,400

• Collected cash from receivables amounting to $185,700  

Dr Cash $ 185,700

Cr Accounts Receivable  $ 185,700

Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.  

Dr Bad Debt Expense $ 1,160

Cr Allowance for Uncollectible Accounts $ 1,160