Answer:
Which journal entry did Pincus make to account for uncollectible accounts in 2021?
During 2021, the company identified $10,800 as uncollectible accounts.
Dr Allowance for Uncollectible Accounts $ 10,800
Cr Accounts Receivable $ 10,800
And how is the bad debt expense recognized for 2021?
Pincus predicts that 5% of the accounts receivable as of 12/31/2021 will not be collected.
Dr Bad Debt Expense $ 1,520
Cr Allowance for Uncollectible Accounts $ 1,520
Explanation:
Pincus rendered services totaling $268,000 on credit.
Dr Accounts Receivable $ 268,000
Cr Sales $ 268,000
In 2021, $10,800 was identified as uncollectible accounts.
Dr Allowance for Uncollectible Accounts $ 10,800
Cr Accounts Receivable $ 10,800
Using the allowance method for bad debts, when an account is written off, the company records a debit to the Allowance for Uncollectible Accounts previously estimated, and a credit to accounts receivable to adjust the accounts receivable balance.
By year-end 2021, cash collected from accounts receivable amounted to $226,800.
Dr Cash $ 226,800
Cr Accounts Receivable $ 226,800
REMAINING BALANCE
Dr Accounts Receivable $ 30,400
Pincus assesses that 5% of the accounts receivable at 12/31/2021 will be uncollectible.
Dr Bad Debt Expense $ 1,520
Cr Allowance for Uncollectible Accounts $ 1,520
