Question

Dowe Cheatem & Howe, a law firm, started 2017 with accounts receivable of $60,000 and an allowance for uncollectible accounts of $5,000. The 2017 service revenue on account was $400,000, and cash collections on account totalled $410,000. During 2017, Dowe Cheatem & Howe wrote off uncollectible accounts receivable of $7,000. At December 31, 2017, the aging-of-receivables method indicated that Dowe Cheatem & Howe will not collect $10,000 of its accounts receivable. Journalize Dowe Cheatem & Howe
(a) service revenue, (b) cash collections on account,
(c) write-offs of uncollectible receivables, and (d) bad debt expense for the year.

Prepare a T-account for Allowance for Uncollectible Accounts to show your computation of bad debt e

Answer 1

Date	Accounts title and explanation	Dr($)	Cr($)
(a)	Accounts Receivable	$ 400,000
	Service Revenue		$ 400,000
	(To record Service revenue on account)
(b)	Cash	$ 410,000
	Accounts Receivable		$ 410,000
	(To record Collection on accounts)
(c)	Allowance for uncollectible accounts	$      7,000
	Accounts Receivable		$      7,000
	(To record write off of receivables)
(d)	Bad Debt expense	$    12,000
	Allowance for uncollectible accounts		$    12,000
	(To record Bad debt expense for the year)
Allowance for uncollectible accounts
Dr			Cr
		$      5,000	Op. Bal
(c)	$                                                                         7,000	$    12,000	(d)
		$    10,000	Cl. Bal
Note: At opeining Allowance account have 5000 cr balance that becomes 2000 dr after write off of receivables, so to maintain cr balance of 10000 at the end, we will create allowance for 12,000 to cover up extra 2000 dr balance in allowance account.