Question

Analysis of receivables method at the end of the current year, accounts receivable has a balance of $4,375,000; allowance for doubtful accounts has a debit balance of $21,300; and sales for the year total $102,480,000. using the aging method, the balance of allowance for doubtful accounts is estimated as $205,000.

determine the amount of the adjusting entry for uncollectible accounts.

Answer 1

To adjust for uncollectible accounts using the aging method, an adjusting entry of $226,300 is determined by adding the desired allowance balance of $205,000 to the current debit balance of $21,300.

Step-by-step explanation:

The amount of the adjusting entry for uncollectible accounts, using the aging method of analyzing receivables, is calculated by first establishing the desired ending balance in the Allowance for Doubtful Accounts and then adjusting accordingly.

Since the desired ending balance for the Allowance for Doubtful Accounts is $205,000 and it currently has a debit balance of $21,300, we need to counteract the debit balance and add enough to reach the desired balance. The adjusting entry would be: Bad Debt Expense (debit) = $205,000 (desired balance) + $21,300 (existing debit balance) Allowance for Doubtful Accounts (credit) = $226,300

This entry will write off the existing debit and establish the correct allowance for uncollectible amounts.