As of december 31, 2021, amy jo's appliances had unadjusted account balances in accounts receivable of $311,000 and $970 in the allowance for uncollectible accounts, following 2021 write-offs of $6,450 in bad debts. an analysis of amy jo's december 31, 2021, accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. bad debt expense for 2021 should be:
a. $5,230
b. $6,220
c. $6,390
d. none of the above is correct

D. None of the above is correct

Explanation:

Dr Bad Debt Expense$ 5,250

Cr Allowance for Uncollectible Accounts$ 5,250

As the company analize  the values at December 31, 2021 it's not necessary consider the write off done during 2021, it means that to calculate the Bad Debt Expenses the company has to analize the balance on Accounts Receivable at December 31, 2021, which is:

December 31. 2021

Dr Accounts Receivable  $ 311,000

Cr Allowance for Doubtful Accounts$ 970

So , the Bad Debt Expenses should be :

Dr Bad Debt Expense$ 5,250

Cr Allowance for Uncollectible Accounts$ 5,250

None of the value presented as option are correct.

December 31. 2021  

Dr Accounts Receivable  $ 311,000

Cr Allowance for Doubtful Accounts$ 970

Following 2021 write-offs of $6,450 in bad debts  

Dr Allowance for Uncollectible Accounts$ 6,450

Cr Accounts Receivable  $ 6,450

accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable.  

Dr Bad Debt Expense$ 5,250

Cr Allowance for Uncollectible Accounts$ 5,250

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % estimated of accounts receivables as CREDIT.

Because the company already has a CREDIT balance in the Allowance for Doubtful Accounts it's necessary to register an entry that complement the existing value and reflect the value as % of account receivable.

turnover

the amount of money taken by a business in a particular period.

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