Question

Use the following to answer questions 12-15 At December 31, KC Co reported accounts receivable of $50,000 and an allowance for uncollectible accounts of $300 (credit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 7% of accounts receivable. 12. $ Estimate the amount of uncollectible receivables: 13. $ When recording the adjusting entry for bad debt expense how much should Allowance for Uncollectible accounts be credited? 14. On January 10, a customer's account balance of $100 is written off as uncollectible. Record the write-off. 15. $ If Net Accounts receivable were $45,000 before the write-off, how much are Net Accounts receivable AFTER the write-off? Use the following to answer questions 16 - 19 For each transaction indicate whether it should: A. Increase, B. decrease, or C. no effect. Stockholders' equity Assets Liabilities Revenues Expenses Credit sales transaction cycle 16. Provide services on account 17. Estimate uncollectible accounts 18. Write off accounts as uncollectible 19. Collect on account previously written off

Answer 1

Solution: K.C. Co Information Given: Balance in Account Receivable 31st December, = $50,000 Balance of Allowance for Uncollectible Accounts = $300 (Credit) Allowance for Uncollectible Accounts should be 7 % of Accounts Receivable 12. Estimate amount of Uncollectible Receivables = Total Accounts Receivable x 7 % = $50,000 x 7/100 = $3,500 13. When recording the adjustment entry for bad debts expenses how much should allowance for uncollectible account receivables be credited: Bad Debts Expense $3,200 Allowance for Uncollectible $3,200 Accounts Receivable (To record estimate of Uncollectible Accounts Receivable) Allowance for Uncollectible Accounts Receivable will be credited by $3,200. Allowance for Uncollectible Account Receivables Account Opening Balance 300 Bad Debts Expense 3,200 Closing Balance 3,500

14. On January, 10, a customer's account balance of $100 is written off as uncollectible; $100 Allowance for Uncollectible Accounts Receivable Accounts Receivable (Accounts Receivable written-off) $100 15. If Net Accounts Receivable were $45,000 before the write off, how much are Net Accounts Receivable after the write off: The write off of Uncollectible Accounts will decrease Accounts Receivable and Allowance for Uncollectible Accounts Receivable by the same amount so the Net Accounts Receivable before write off and after write off will be the same. Net Accounts Receivable after the write off: $45,000