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At the end of the year, Mercy Cosmetics' balance of Allowance for Uncollectible Accounts is $600...


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.) 


At the end of the year, Mercy Cosmetics balance of Allowance for Uncollectible Accounts is $600 (debit, before adjustment. T

Solutions

Expert Solution

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

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