On January 1, Dillon Company had a $3,100 credit balance in the Allowance for Doubtful Accounts. During the year, sales totaled $780,000 and $6,900 of accounts receivable were written off as uncollectible. A December 31 aging of accounts receivable indicated the amount probably uncollectible to be $5,300. (No recoveries of accounts previously written off were made during the year.) Dillon's financial statements for the current year should include:

Question

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To find the uncollectible accounts expense, adjust the Allowance for Doubtful Accounts to the desired ending balance of $5,300. Starting with a $3,100 credit balance, subtract the $6,900 write-off, resulting in a $3,800 debit balance. To reach the $5,300 credit balance, an expense of $9,100 is needed ($5,300 + $3,800).

On January 1, Dillon Company Had a $3,100 Credit Balance