Britos Hyundai Sales and Service estimates the amount of uncollectible accounts using the percentage of receivables method. After aging the accounts, it is estimated that $4,500 will not be collected. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has a credit balance of $710.
2. Allowance for Doubtful Accounts has a debit balance of $305.

Required:
Journalize the entries.

Explanation:

a. Total bad debts expenses = Estimated uncollectible accounts - Credit balance in the allowance account before adjustment  

= $4500 - $710

= $3,790

Date       Account title                          Debit     Credit

Dec 31     Bad Debt Expense                $3,790

                  Allowance for Doubtful Accounts    $3,790

a. Total bad debts expenses = Debit balance in the allowance account before adjustment + estimated uncollectible accounts

= $305+ $4500

= $4,805

Date       Account title                          Debit     Credit

Dec 31     Bad Debt Expense                $4,805

                  Allowance for Doubtful Accounts    $4,805