Answer:
Write off entry.
Allowance for Uncollectible Accounts $ 25,000
Accounts Receivable $ 25,000
Explanation:
Percentage of Sales Method of net credit sales 5%
Credit Sales $ 500,000
Cash Sales $ 500,000
Accounts Receivable $ 200,000
Allowance for Uncollectible Accounts $ 1,000
Bad Debts Expense = Estimated % × Credit Sales
Bad Debts Expense = 5% x $ 500,000 = $ 25,000
Entry
Bad debt expense $ 25,000
Allowance for Uncollectible Accounts $ 25,000
New Balance
Accounts Receivable $ 200,000
Allowance for Uncollectible Accounts $ 26,000
Write Off Entry
Allowance for Uncollectible Accounts $ 25,000
Accounts Receivable $ 25,000
END Balance
Accounts Receivable $ 175,000
Allowance for Uncollectible Accounts $ 1,000
