business accounting

Question

Prepare the adjusting entry on December 31, 2016.

Determine the balance in the Allowance for Uncollectible Accounts account after the adjusting entry is recorded.

Show how the receivables would be reported on the December 31, 2016, Balance Sheet for Storage Tek Corporation.

Answer 1

First you would check the balance as of 12/31/2015. After a review of Accounts receivable it is determined the uncollectible accounts have increased by $45,000 during CY2016. The adjusting journal entry would be as follows:

Dr Bad Debt Expense $45,0000

Cr Allowance for bad debt $45,0000

Oh the balance sheet the allowance for bad debt account is a contra account to Accounts receivable. The Allowance account reduces the carrying value of Accounts Receivable by the current balance in the account.