A company has $286,000 in credit sales.The company uses the allowance method to account for uncollectible accounts.The Allowance for Doubtful Accounts now has a $2,280 credit balance.If the company estimates that $7,640 of accounts will be uncollectible based on an aging of Accounts Receivable,what will be the amount of the journal entry to record estimated uncollectible accounts?

Question

Quizplus · Accepted Answer

The journal entry to record estimated uncollectible accounts is calculated as follows:

1. Determine the amount of the adjustment. In this case, the estimated uncollectible accounts is $7,640.

2. Calculate the new balance of the allowance for doubtful accounts. The current credit balance is $2,280, which will be increased by the estimated uncollectible accounts of $7,640. Therefore, the new balance will be $9,920 ($2,280 + $7,640).

3. Record the journal entry:

Debit: Bad Debt Expense $7,640
Credit: Allowance for Doubtful Accounts $7,640

Therefore, the correct answer is D ($5,360).

A Company Has $286,000 in Credit Sales