Answer:
D. None of the above is correct
Explanation:
Dr Bad Debt Expense $ 5,250
Cr Allowance for Uncollectible Accounts $ 5,250
As the company analize the values at December 31, 2021 it's not necessary consider the write off done during 2021, it means that to calculate the Bad Debt Expenses the company has to analize the balance on Accounts Receivable at December 31, 2021, which is:
December 31. 2021
Dr Accounts Receivable $ 311,000
Cr Allowance for Doubtful Accounts $ 970
So , the Bad Debt Expenses should be :
Dr Bad Debt Expense $ 5,250
Cr Allowance for Uncollectible Accounts $ 5,250
None of the value presented as option are correct.
December 31. 2021
Dr Accounts Receivable $ 311,000
Cr Allowance for Doubtful Accounts $ 970
Following 2021 write-offs of $6,450 in bad debts
Dr Allowance for Uncollectible Accounts $ 6,450
Cr Accounts Receivable $ 6,450
accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable.
Dr Bad Debt Expense $ 5,250
Cr Allowance for Uncollectible Accounts $ 5,250
If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % estimated of accounts receivables as CREDIT.
Because the company already has a CREDIT balance in the Allowance for Doubtful Accounts it's necessary to register an entry that complement the existing value and reflect the value as % of account receivable.
