Question

Southwest Pediatrics has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $119,000; Allowance for Uncollectible Accounts = $1,900 (debit). On December 31, 2021, Southwest estimates uncollectible accounts to be 15% of accounts receivable. Required: 1. Record the adjusting entry for uncollectible accounts on December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer:

Explanation:

The adjusting entry is shown below:

Bad debt expense A/c Dr $19,750

     To Allowance for Uncollectible Accounts $19,750

(Being the bad debt expense is adjusted)

The computation of the Allowance for Uncollectible Accounts is shown below:

= Accounts receivable × estimated percentage + debit balance of allowance for uncollectible accounts

= $119,000× 15% + $1,900

= $17,850 + $1,900

= $19,750