In: Accounting
At the end of the year, Mercy Cosmetics' balance of Allowance for Uncollectible Accounts is $600 (debit, before adjustment. The balance of Accounts Receivable is $25,000. The company estimates that 12% of accounts will not be collected over the next year.
What is the adjustment Mercy Cosmetics would record for Allowance for Uncollectible Accounts? (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
1)
Estimated Allowance for Uncollectible Accounts ($25,000 × 12%) | $3000 |
Less: Allowance for Uncollectible Accounts Balance (credit) | ( $600) |
Adjustment Mercy would record |
$ 2400 |
2) Journal Entry:
Date | Account Name | Debit | Credit |
1 | Bad debt expense | $2400 | |
To Allowance for uncollectible accounts | $2400 |