The Frankenstein Hotel's journal entry reflects a provision for doubtful accounts and the amount of accounts receivable. This entry is made to account for the possibility that some customers may not pay their debts.
The journal entry provided indicates that the company has made a provision for doubtful accounts in the amount of $2,000. This means that the company is estimating that a portion of its accounts receivable may not be collected in the future. The accounts receivable amount of $2,000 represents the total amount owed to the company by its customers.
The provision for doubtful accounts is a contra-asset account that is used to reduce the accounts receivable to its estimated net realizable value. It is based on the company's assessment of the collectability of its outstanding receivables. By recognizing a provision for doubtful accounts, the company is being conservative and accounting for the possibility that some customers may not pay their debts.