Adjusting entry to estimate uncollectible accounts.
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Chaney Ltd. started business several years ago. For the year ended December 31, 2010, the
following information (before adjustments) is available:
Accounts Receivable 56,000
Allowance for Doubtful Accounts 350
Sales (all on account) 195,700
Sales Discounts 1,800
All accounts have normal balances
Required:
Prepare entries for each of the following selected transactions:
1. Management estimated uncollectible customer accounts to be 1.5% of net credit sales.
Prepare the December 31, 2010 adjusting entry to estimate uncollectible accounts.
2. On March 15, 2011, a $1,750 account receivable for customer Donovan Watson was
determined to be uncollectible and was written off.
3. For 2011, management estimated uncollectible customer accounts to be 5% of outstanding
account receivable. Prepare the December 31, 2011 adjusting entry to estimate uncollectible
accounts assuming accounts receivable balance at this date is $75,000.
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Solution Summary
Adjusting entry to estimate uncollectible accounts are examined. The uncollectible customers are examined.
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