Answer:
Accounts Receivable $ 118,000
Allowance for Uncollectible Accounts $ 1,600
Bad debt expense $ 14,880
Allowance for Uncollectible Accounts $ 14,880
Accounts Receivable $ 118,000
Allowance for Uncollectible Accounts $ 16,480
Explanation:
Acc. Rec Allow.
7% $ 79,000 $ 5,530 Not yet due
25% $ 36,000 $ 9,000 1-30 days
65% $ 3,000 $ 1,950 more than 30 days
$ 118,000 $ 16,480
Accounts Uncollectible are those credit that the company give and there are not chances of been collected.
When the customers buy products on credits but then the company can't collect the debt, then it's necessary to write off the unpaid bill as uncollectible .
One way it's to write-off directly the bad debts at the moment decided that the credit are uncollectible, the total amount
it's reported as bad debt expenses which affect negativly the income statement and the accounts receivable are reduce in the same amount, less assets.
The other way it's to determine a percentage of total amount of accounts receivables as uncollectible, exist many ways to analize the accounts receivable and figure the value of uncollectible.
When the company have the percentage of uncollectible accounts the journal entry required is Bad Expenses (debit) with Allowance for Uncollectible Accounts (credit)
At the moment of the write-off as the expenses were before recognized we only use the Allowance for Uncollectible Accounts (Debit) with Accounts Receivable (Credit), with this we are recognizing the uncollectible credit of the company.
