I was given gross accounts receivable $15,200,000 and $17,600,000 respectively; allowance for uncollectible accounts at the begining and end of the year $1,400,000 and $1,550,000; expense for estimated uncollectible accouts $750,00 which was 1% of sales; no recoveries of accounts written off in previous years. I need to reconstruct the journal entries using th allowance method
To reconstruct the journal entries using the allowance method for the given information, we need to consider the changes in the allowance for uncollectible accounts and the expense for estimated uncollectible accounts.
First, let's determine the amount of sales for the year by dividing the estimated uncollectible accounts expense by 1%:
Sales = Expense for estimated uncollectible accounts / 1%
Sales = $750,000 / 1% = $75,000,000
Now, we can construct the journal entries step by step:
1. To record the estimated uncollectible accounts expense:
Debit: Bad Debt Expense $750,000
Credit: Allowance for Uncollectible Accounts $750,000
2. To record the increase in the allowance for uncollectible accounts during the year:
Debit: Allowance for Uncollectible Accounts $150,000 ($1,550,000 - $1,400,000)
Credit: Bad Debt Expense $150,000
3. To write off the actual uncollectible accounts during the year:
Debit: Allowance for Uncollectible Accounts $X (Amount of specific account)
Credit: Accounts Receivable $X (Amount of specific account)
Note: You will need specific information to determine the exact amounts for the write-offs.
Overall, these journal entries will help you reconstruct the transactions related to the allowance method for uncollectible accounts.