Question

At the end of 2018, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (credit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method. Murray State's adjustment on December 31, 2018, to record its estimated uncollectible accounts included a:__________

Answer 1

Debit to Bad Debt Expense of $7,500;

credit to Allowance for Uncollectible Accounts of $7,500.

Step-by-step explanation:

Debit to Bad Debt Expense of $7,500;

credit to Allowance for Uncollectible Accounts of $7,500.

The term uncollectible accounts receivable is used to describe the portion of credit sales in accounts receivable the company does not expect to collect from a customer. Uncollectible accounts is used in the valuation of accounts receivable, which appears on a company's balance sheet.