Question

At December 3 2018, Waco Travel Agency has an Accounts Receivable balance of $93,000. Allowance for Uncollectible Accounts has a credit balance of $870 before the year-end adjustment. Service revenue (all on account) for 2018 was $800,000. Waco estimates that its uncollectible-account expense for the year is 1% of service revenue.

Make the year-end entry to record uncollectible- account e are reported on the balance sheet at December 31,2018.
Show how Accounts Receivable and Allowance for Uncollectible Accounts.

Answer 1

Waco Travel Agency

Journal entry

Date Account and explanation Debit Credit

Dec 31 Bad debt expense (800,000 * 1%) $8,000

Allowance for uncollectible accounts $8,000

(To record uncollectible account expense)

Waco Travel Agency

Balance Sheet

Current assets

Account receivable $93,000

Less: Allowance for uncollectible account ($8,870) ---- ($8,000 + $870)

$84,130