Question

Assume that it is now November 30th, your client has an Accounts Receivable balance of $4,500 and an Allowance for Uncollectible Accounts balance of $75 (assume the normal balance for both accounts). November Sales totaled $15,000. The estimate for the uncollectible amount is based on November Sales, and the estimate is $450. What would be the allowance transaction AMOUNT?

Answer 1

$375

Step-by-step explanation:

When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.

Allowance transaction amount

= $450 - $75

= $375