A company has $314,000 in credit sales.The company uses the allowance method to account for uncollectible accounts.The Allowance for Doubtful Accounts now has a $1,890 debit balance.If the company estimates that $8,160 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 will be a credit to the Allowance for Doubtful Accounts and a debit to the Bad Debt Expense.

The current balance on the Allowance for Doubtful Accounts is a debit of $1,890. The estimated uncollectible accounts based on aging is $8,160.

Therefore, to adjust the account to the estimated amount, we need to credit the Allowance for Doubtful Accounts for $8,160 - $1,890 = $6,270.

The journal entry will be:
Bad Debt Expense    $6,270
Allowance for Doubtful Accounts    $6,270

A Company Has $314,000 in Credit Sales