Question

On January 1, 2018, the general ledger of a company includes the following account balances:

Accounts	Debit			Credit
Cash	$	71,000
Accounts Receivable		41,000
Allowance for Uncollectible Accounts				$	5,000
Inventory		31,000
Building		71,000
Accumulated Depreciation					11,000
Land		201,000
Accounts Payable					21,000
Notes Payable (9%, due in 3 years)					34,000
Common Stock					101,000
Retained Earnings					243,000
Totals	$	415,000		$	415,000

The company accounts for all inventory transactions using the perpetual FIFO method. Purchases and sales of inventory are recorded using the gross method for cash discounts. The $42,000 beginning balance of inventory consists of 350 units, each costing $120. During January 2018, the company had the following transactions:

During January 2018, the following transactions occur:

January		2		Lent $21,000 to an employee by accepting 6% note due in six months.
January		5		Purchased 3,600 units of inventory on account for $468,000 ($130 each) with terms 1/10, n/30.
January		8		Returned 110 defective units of inventory purchased on January 5.
January		15		Sold 3,400 units of inventory on account for $510,000 ($150 each) with terms 2/10, n/30.
January		17		Customers returned 300 units sold on January 15. These units are placed in inventory to be sold in the future.
January		20		Received cash from customers on accounts receivable. This amount includes $37,000 from 2017 plus amount receivable on sale of 2,800 units sold on January 15.
January		21		Wrote off remaining accounts receivable from 2017.
January		24		Paid on accounts payable. The amount includes the amount owed at the beginning of the period plus the amount owed from purchase of 3,200 units on January 5.
January		28		Paid cash for salaries during January, $29,000.
January		29		Paid cash for utilities during January, $11,000.
January		30		Paid dividends, $4,000.

The following information is available on January 31, 2018.

Of the remaining accounts receivable, the company estimates that 10% will not be collected.

Accrued interest income on notes receivable for January.

Accrued interest expense on notes payable for January.

Accrued income taxes at the end of January for $5,100.

Depreciation on the building, $2,100.

I need help with the following:

The journal entry: Of the remaining accounts receivable, the company estimates that 10% will not be collected.

Answer 1

• All working forms part of the answer
• Please note that you have only asked for “…The journal entry: Of the remaining accounts receivable, the company estimates that 10% will not be collected.” And I’m providing the help regarding the same.
• Please go through following workings to understand:

Working #1
	Transaction	Accounts receivables
Beginning Balance		$               41,000.00
Jan-15	Sold goods on account [3400 x $150]	$             510,000.00
Jan-17	Sales Return (300 x $150)	$             (45,000.00)
Jan-20	Received cash (37000 + [28002 x $150])	$          (457,000.00)
Jan-21	Accounts written off (2017: 41,000 - 37,000 cash received)	$               (4,000.00)
Remaining Accounts receivables on Jan 31, 2018		$               45,000.00

Working #2
A [calculated in Working #1]	Remaining Accounts receivables on Jan 31, 2018	$               45,000.00
B = A x 10% uncollectible	Adjusted allowance for Uncollectible balance should be	$                 4,500.00

Working #3
A [given in Trial Balance]	Beginning balance of Allowance account	$                 5,000.00
B	Accounts written off on Jan 21	$                 4,000.00
C = A - B	Unadjusted allowance for uncollectible account balance	$                 1,000.00
D [calculated in Working #2]	Adjusted balance required	$                 4,500.00
E = D - C	Bad Debt (uncollectible) Expense for the period	$                 3,500.00

• Journal Entry as asked by you regarding Accounts receivables estimated to be uncollectible, based on amount calculated in Working #3

Date	Accounts title	Debit	Credit
31-Jan-18	Bad Debt (Uncollectible) Expense	$                 3,500.00
	Allowance for Uncollectible Accounts		$                       3,500.00
	(Uncollectible accounts estimated and recorded)