Matt's Magic Store has credit sales of $500,000 in 2020 and a debit balance of $800 in the Allowance for Doubtful Accounts at year end. As of December 31, 2020, $120,000 of accounts receivable remain uncollected. Matt's Magic uses the percentage of credit sales method. The historical level of bad debts expense is 2.5%.
Instructions
a) Prepare the adjusting entry to record the estimated uncollectible accounts expense on December 31, 2020.
b) Show the Statement of Financial Position presentation of accounts receivable on December 31, 2020.

Question

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The Answer of Matt's Magic Store has credit sales of $500,000 in 2020 and a debit balance of $800 in the Allowance for Doubtful Accounts at year end. As of December 31, 2020, $120,000 of accounts receivable remain uncollected. Matt's Magic uses the percentage of credit sales method. The historical level of bad debts expense is 2.5%.
Instructions
a) Prepare the adjusting entry to record the estimated uncollectible accounts expense on December 31, 2020.
b) Show the Statement of Financial Position presentation of accounts receivable on December 31, 2020.

Matt's Magic Store Has Credit Sales of $500,000 in 2020