Universal Co. sells discounted internet access to college students. In 2021, sales for the year were $840,000, of which 60% were on credit. Universal initially records bad debt expense as 2% of credit sales. On January 1, 2021, the balance in the allowance for doubtful accounts was $8,000. During 2021, Universal decided to write off $5,000 in uncollectible accounts. It also recovered $2,500 of previously written-off amounts during 2021. At year end, management reviewed outstanding receivables, and decided that a balance of $9,000 would be appropriate for the allowance account. Required: Prepare the journal entry for the initial recording of bad debt expense in the year Prepare the journal entries for:-The write-off of uncollectible amounts in 2021-The collection of previously written-off amounts in 2021. 3-Prepare the adjusting journal entry needed to bring the allowance account to its appropriate year-end balance.

The allowance for doubtful accounts is created to record estimated bad debt expense for the period.

Answered: Universal Co. sells discounted internet…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter16: Accounting For Accounts Receivable

Section: Chapter Questions

Problem 2CE: Tonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit...

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Universal Co. sells discounted internet access to college students. In 2021, sales for the year were $840,000, of which 60% were on credit. Universal initially records bad debt expense as 2% of credit sales. On January 1, 2021, the balance in the allowance for doubtful accounts was $8,000. During 2021, Universal decided to write off $5,000 in uncollectible accounts. It also recovered $2,500 of previously written-off amounts during 2021. At year end, management reviewed outstanding receivables, and decided that a balance of $9,000 would be appropriate for the allowance account.

Required:

Prepare the journal entry for the initial recording of bad debt expense in the year
Prepare the journal entries for:

-The write-off of uncollectible amounts in 2021

-The collection of previously written-off amounts in 2021.

3-Prepare the adjusting journal entry needed to bring the allowance account to its appropriate year-end balance.

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