The Fortune Company uses allowance method to recognize uncollectible accounts expense. It provides you the following selected information, Accounts receivable on December 31 2017, RO380,000,Required balance in Allowance for Doubtful Accounts account on December 31, 2017 RO3,000,Existing balance in Allowance for Doubtful Accounts account on December 31, 2017 RO2,500,The journal entry to recognize uncollectible accounts expense on December 31, 2017 is: a. Dr. Accounts Receivable 2500 Cr Allowance for Uncollectible Accounts Expense 2500 b. Dr Uncollectible Accounts Expense 3000 Cr Allowance for Doubtful Accounts 3000 c. Dr. Accounts Receivable 2500 Cr Uncollectible Accounts Expense 2500 d. Dr Uncollectible Accounts Expense 500 & Cr Allowance for Doubtful Accounts 500

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Q: Instructions

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Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.  

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.