Question

At December 31, year 1, Gasp Co.'s allowance for uncollectible accounts had a credit balance of $30,000. During year 2, Gasp wrote off uncollectible accounts of $45,000. At December 31, year 2, an aging of the accounts receivable indicated that $50,000 of the December 31, year 2, receivables may be uncollectible. What amount of allowance for uncollectible accounts should Gasp report in its December 31, year 2, balance sheet?

A. $20,000B. $25,000C. $35,000D. $50,000

Answer 1

Un-Collectibles accounts at (end)= $35000

Step-by-step explanation:

(Open) = Allowance for doubtful debts = 30000

During the years allowance for bad debts are written off is = 45000

and 50000 further allowance created.

- entry of written of allowance: Dr Allowance for bad debts 45000

Cr Account receivable 45000.

- Dr Bad debts expense 50000

Cr Allowance for bad debts 50000

( To record allowance for bad debts)

- Allowance for uncollectible account (end)= 30000-45000+50000

= $35000.

Answer 2

What amount of allowance for uncollectible accounts should Gasp report in its December 31, year 2, balance sheet?

Balance sheet_____ 35000

Step-by-step explanation:

Beggining balance 30000

Wrotte off_______ 45000

Difference_______ -15000

Uncollectilble calculate 50000

Balance sheet_____ 35000

The allowance for doubtful accounts is a contra-asset account that records the amount of receivables expected to be uncollectible. The allowance is established in the same accounting period as the original sale, with an offset to bad debt expens