Question

On December 31, 2020, Central Freight reported an allowance for uncollectible accounts of $15,300. During 2021, Central wrote off $17,000 in accounts receivable. Included in the write-off was Roskoff Corp.'s account in the amount of $750. Roskoff subsequently paid this balance. At December 31, 2021, an analysis of the accounts receivable aging schedule indicated the need for an allowance for uncollectible accounts of $14,900.
Prepare all implied journal entries relative to bad debt expense and the allowance for the uncollectible accounts.

Answer 1

Answer:

Explanation:

To write off specific accounts:

Debit (contra asset account) - Allowance for uncollectible accounts $17,000

Credit (asset account) - Accounts receivable $17,000

To reinstate account previously written off:

Debit (asset account) - Accounts receivable $750

Credit (contra asset account) - Allowance for uncollectible accounts $750

To adjust allowance for uncollectible accounts at year-end :

Bad debt expense = allowance for uncollectible accounts at the end of the period - (allowance for uncollectible accounts at the beginning of the period - wrote off + reinstate account previously written off)

Bad debt expense = $14,900 – ($15,300 – $17,000 + $750)

Debit (expense account) - Bad debt expense $15,850

Credit (contra asset account) - Allowance for uncollectible accounts 15,850