Question

At December 31, Amy Jo's Appliances had account balances in Accounts Receivable of $309,000 and $600 (credit) in Allowance for Uncollectible Accounts. An analysis of Amy Jo's December 31 accounts receivable suggests that the allowance for uncollectible accounts should be 5% of accounts receivable. Bad debt expense for the year should be:

Answer 1

Bad debt expense $ 14.850

Step-by-step explanation:

Initial Balance

Accounts Receivable $ 309.000

Allowance for Uncollectible Accounts $ 600

Should be 5% of the Accounts Receivables

Allowance for Uncollectible Accounts $ 15.450

We must calculate the difference between the actual balance and the must be balance.

Adjustment entry

Bad debt expense $ 14.850

Allowance for Uncollectible Accounts $ 14.850

END Balance

Accounts Receivable $ 309.000

Allowance for Uncollectible Accounts $ 15.450