Question

At the end of the year, Brinkley Incorporated’s balance of Allowance for Uncollectible Accounts is $2,300 (debit) before adjustment. The company estimates future uncollectible accounts to be 5% of credit sales for the year. Credit sales for the year total $118,000. What adjustment would Brinkley record for Allowance for Uncollectible Accounts using the percentage-of-credit-sales method? (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.)

Answer 1

bad debt expense 5,900 debit

allowance for uncollectible amount 5,900 credit

Step-by-step explanation:

5% of credit sales for the year. are uncollectible.

this means we adjuste the allowance directly by this value.

credit sales: 118,000

expected uncolectible 5%

bad debt expense: 118,000 x 5% = 5,900

we will recognize the expense and credti the allwoance by this maount