Southwest Pediatrics has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $130,000; Allowance for Uncollectible Accounts = $2,100 (debit). On December 31, 2021, Southwest estimates uncollectible accounts to be 20% of accounts receivable. Required: 1. Record the adjusting entry for uncollectible accounts on December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Question

Vinny

Business

29 April, 23:00

Southwest Pediatrics has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $130,000; Allowance for Uncollectible Accounts = $2,100 (debit). On December 31, 2021, Southwest estimates uncollectible accounts to be 20% of accounts receivable. Required: 1. Record the adjusting entry for uncollectible accounts on December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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Dominick Lamb · Answer 1

Before passing the journal entry, we have to find out the bad debt expense amount which is shown below:

Bad debt expense = Account receivable balance * uncollectible percentage + debit uncollectible account balance

= $130,000 * 20% + $2,100

= $26,000 + $2,100

= $28,100

So, the journal entry would be

Bad debts expense A/c Dr $28,100

To Allowance for uncollectible accounts $28,100

(Being uncollectible accounts is adjusted)