Question

Dewey, Cheatem, and Howe, LL. provides legal services. During 2021, the company provides services of $500,000 on account, or this amount. $74,000 remalns uncollected at the end of the year. It has been determined that 15% of that anount will not be collected form customers. Required: 1. Prepare the adjusting joumal entry for Decembet 31,2021 , assuming the balance of Allowance for Uncollectible Accounts before adjustment is 5500 (credit balance) 2. On Apail 3,2022 a customer's accouint balance of $600 is watten off as uncollectible. Record the wite- off. 3. On July 17.2022, the customer whose account was witten otf in Pequilement 2 unexpectedly pays $200 of the amount cwed. Record the journal entries to record thes cash collection.

Answer 1

Step-by-step explanation:

1. Adjusting journal entry for December 31, 2021:

Debit: Bad Debt Expense $9,150

Credit: Allowance for Uncollectible Accounts $9,150

Calculation:

$74,000 x 15% = $11,100

$11,100 - $5,500 (balance of Allowance for Uncollectible Accounts before adjustment) = $5,600

$5,600 + $3,550 (Bad Debt Expense balance before adjustment) = $9,150

2. Write-off on April 3, 2022:

Debit: Allowance for Uncollectible Accounts $600

Credit: Accounts Receivable $600

3. Cash collection on July 17, 2022:

Debit: Cash $200

Credit: Accounts Receivable $200