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19 March, 08:36

On December 31, Year 1, Kardashian Company recorded an adjusting entry to recognize uncollectible accounts expense. Kardashian had credit sales of $547,000 and estimates uncollectible accounts expense to be one percent of credit sales. Which of the following journal entries shows how this event would be recorded under the allowance method?

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  1. 19 March, 08:47
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    Dr. Bad Debt Expense $5,470

    Cr. Allowance for uncollectible accounts $5,470

    Explanation:

    The Allowance method requires to recognize the estimated bad debt expense int he period of sale. For this purpose an adjusting entry is made using an estimed percentage value of sales as uncollectible accounts.

    Allownace for Uncollectible accounts = $547,000 x 1% = $5,470
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