Question

Warner Company’s year-end unadjusted trial balance shows accounts receivable of \(99,000, allowance for doubtful accounts of \)600 (credit), and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable.

1. Prepare the December 31 year-end adjusting entry for uncollectibles.

Short answer

Allowance for doubtful accounts is the type of provision an organization makes for those accounts for whom an organization doubts non-repayment of the due amount from its debtors.

Step-by-step solution

Introduction

The adjusting entry at the end of the Warner Company’s financial year will be recorded by considering the amount of sales and the amount of uncollectible of the firm.

Journal entry

Date	Particulars	Debit	Credit
December 31	Bad debt expense	$3,600
	Allowance for doubtful accounts		$3,600
	(To record the bad debt expense)