The Hernandez Corporation has a 3100 debit balance in the Al

The Hernandez Corporation has a $3,100 debit balance in the Allowance for Uncollectible Accounts account before any adjusting journal entry has been made. Based on prior experience the credit department estimates that 2.5% of sales are uncollectible. net sales for the year are $998,600. An aging analysis was also prepared and the aging result was $24,000. Prepare the appropriate journal entry to record uncollectible accounts expense if the Percentage of Net Sales method is used. Prepare the appropriate journal entry to record uncollectible accounts expense if the Accounts Receivable Aging method is used. Calculate the Allowance for Uncollectible Accounts ending balance if the Percentage of Net Sales Method was used. Calculate the Allowance for Uncollectibel Accounts ending balance if the Accounts Receivable Aging Method was used.

Solution

1 Net credit sale % method Net credit sale for the year 998600 Estimated uncollectible balance 2.50% Total amount 24965 Beginning balance 3100 Debit Bad debt expense 28065 Bad debt expense 28065            Allowance for doubt ful debt 28065 Uncollectible accounts ending balance 24965 2 Aging method Beginning balance 3100 debit Allowance by aging method 24000 Credit Bad debt expense 27100 Bad debt expense 27100                    Allowance for doubtful accounts 27100 Uncollectible accounts ending balance 24000