Question

practice exam questions , help would be really appreicated and returned with a thumbs up!! thanks in advance

Help Warner Company's year-end unadjusted trial balance shows accounts receivable of $1,000, allowance for doubtful accounts of $720 (credit), and sales of $400,000. Uncollectibles are estimated to be 1% of sales. Prepare the December 31 year-end adjusting entry for uncollectibles. View transaction list 01 Journal entry worksheet < Record the estimate of uncollectibles. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31 View general Journal Clear entry Record entry Next < Prey

Answer 1

Solution :

Date	General Journal	Debit($)	Credit($)
Dec 31	Uncollectible Account Expense (WN1)	3,280
	Allowances for Doubtful Accounts		3,280

WN1 : $4000 - $720=$3280

Notice that the estimated uncollectible accounts on December 31  are $4,000 ($400000*1%) but allowance for doubtful accounts has been credited with only $3280. The reason is that there is already a credit balance of $720 in the allowance for doubtful accounts. We just need to increase the existing balance by $3,280 to achieve a required balance of $4,000 ($3,280 + $720).