posted by stuckinmath .
On Dec 31, 2007, before adjusting entries, the blances of selected accounts for the company were as follows:
Accounts receivable 840,000
Allowance for uncollectable accounts (debit balance) 2,000 dr.
The company has determined that historically about 2.0 percent of accounts receivable are never collected and uses this bases to determine it's bad debts provivion. Give the journal entry to record the companies estimated loss from uncollectible accounts on Dec 31.
I am totally lost. Could someone please help me out??
The allowance for uncollectible debts should be adjusted to 2% of 840,000, or 16,800. Since there was already a 2000 dollar debit balance in this category, 14,800 should be added to the estimated loss from debts.
I am not an accounting expdertr, so I do not guarantee that answer.