(Learning Objective 4: Applying the allowance method to account for uncollectibl

Question

(Learning Objective 4: Applying the allowance method to account for uncollectibles) Gray and Dumham, a law firm, started 20X6 with accounts receivable of $31,000 and an allowance for uncollectible accounts of $4,000. The 20X6 service revenues on account totaled $175,000, and cash collections on account totaled $128,000. During 20X6, Gray and Dumham wrote off uncollectible accounts receivable of $2,800. At December 31, 20X6, the aging of accounts receivable indicated that Gray and Dumham will not collect $1,850 of its accounts receivable. Journalize Gray and Dumham's (a) service revenue, (b) cash collections on account, (c) write-offs of uncollectible receivables, and (d) uncollectible-account expense for the year. Explanations are not required. Prepare a T-account for Allowance for Uncollectible Accounts to show your computation of uncollectible-account expense for the year.

Explanation / Answer

Journal Entries:

Allowance for Uncollectible Accounts Receivable

Date Account Names Debit Credit 20X6 Accounts Receivable 175000          Service Revenues 175000 Cash 128000          Accounts Receivalbes 128000 Allowance for Uncollectible Accounts Receivable 2800          Uncollectible Accounts Receivables 2800 Uncollectible Account expense 1850          Allowance for Uncollectible Accounts Receivable 1850

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