Question

warner company’s year - end unadjusted trial balance shows accounts receivable of $104,000, allowance for $650 (credit), and sales of $330,000. uncollectibles are estimated to be 1% of sales. prepare the december 31 year - end adjusting entry for uncollectibles. view transaction list journal entry worksheet 1 record the estimate of uncollectibles. note: enter debits before credits. date general journal debit credit december 31

Explanation:

Step1: Calculate estimated uncollectibles

Estimated uncollectibles = Sales Percentage of uncollectibles. Given sales = $330,000 and percentage = 1% or 0.01. So, Estimated uncollectibles = $330,000 0.01 = $3,300.

Step2: Determine the adjustment amount

The allowance for doubtful accounts has a credit balance of $650. The required ending balance of the allowance account is $3,300 (from Step 1). So the adjustment amount = Required ending balance - Current balance = $3,300 - $650 = $2,650.

Step3: Record the adjusting entry

The adjusting entry will debit Bad - Debt Expense (to recognize the expense) and credit Allowance for Doubtful Accounts (to increase the allowance balance).

Answer:

Date	General Journal	Debit	Credit
December 31	Allowance for Doubtful Accounts		$2,650