Accounting: provision for uncollectible accounts receivable
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The year ended December 31, 2005, Ed Co. estimated its allowance for uncollectible accounts using the year-end aging of accounts receivable. The following data are available:
Allowance for uncollectible accounts, 1/1/04 $51,000
Provision for uncollectible accounts during 2004
(2% on credit sales of $2,000,000) 40,000
Uncollectible accounts written off, 11/30/04 44,000
Estimated uncollectible accounts per aging, 12/31/04 74,000
After year-end adjustment, the uncollectible accounts expense for 2005 should be
a. $44,000.
b. $55,000.
c. $74,000.
d. $67,000.
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Solution Summary
The solution presents the journal entries which would have been prepared with the data given. With the adjustments, an explanation discloses the amount and the answer.
Solution Preview
Opening balance is a credit of $51,000 (contra asset account)
Provision entry
Debit uncollectible accounts expense $40,000
Credit allowance ...
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