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    wwilki5796's Avatar
    wwilki5796 Posts: 5, Reputation: 1
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    #1

    Apr 22, 2007, 10:26 AM
    journalize entries to record allowance for doubtful accounts
    How would you journalize entries to record allowance for doubtful accounts

    debit credit

    accounts recv. 520,000

    all for uncollect. Accts 300

    sales 1,460,000


    management determines that they need an allowance equal to 3% of accounts recievable, prepare necessary year end adjusting entry.


    my answer is

    bad debt expense 43,500
    allowance for uncollect. 43,500 - how I got my answer (1,460,000 x 3% =43,800-300=43,500
    )
    ThePhantom's Avatar
    ThePhantom Posts: 4, Reputation: 1
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    #2

    Apr 22, 2007, 10:46 AM
    Journalize entry

    [Dr.] Bad debt expense 15,300
    [Cr.] Allowance for uncoll. Acc. 15,300

    Explaination:

    management determines that they need an allowance equal to 3% of accounts recievable, this method is termed as 'balance sheet approach'

    Allowance for uncoll. Acc.
    = 520,000 * 0.03
    = 15600

    Allow. For uncoll. Acc. - Cl.bal 15,600
    Allow. For uncoll. Acc. - Op.bal (300)
    Allow. Made during the year 15,300
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