Question

The current credit balance in Allowance for Uncollectible Accounts before adjustment is $650. An aging schedule reveals $3,500 of uncollectible accounts. What is the debit amount to Uncollectible-Account Expense for this entry, and the ending balance in the Allowance for Uncollectible Accounts?

Answer 1

Uncollectible Accounts Expense = $2,850

Ending balance of Allowance for Uncollectible Accounts = $3,500

Step-by-step explanation:

Using the aging schedule under the allowance method for accounting for uncollectible accounts, you calculate the ending balance in the allowance account, and you must determine the adjustment needed to reach that ending balance.

In this example, the ending balance in the allowance account was given to be $3,500. Since there was a previous balance of $650 in the allowance account, the adjusting entry needed to reach this desired balance is $2,850 ($3,500 - $650).