The Connecting Company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transactions occurred: Sept. 7 Connecting Company determined that the $8,100 account receivable of the Hel

On September 7, Connecting Company determined that Helena Company's $8,100 account receivable was uncollectible and wrote it off. The journal entry for this transaction would be: Accounts Receivable - Helena Company $8,100 Allowance for Doubtful Accounts $8,100 On October 15, Connecting Company determined that Tree Company's $2,500 account receivable was uncollectible and wrote it off. The journal entry for this transaction would be: Accounts Receivable - Tree Company $2,500 Allowance for Doubtful Accounts $2,500 On November 9, Helena Company paid $6,000 of the amount owed to Connecting Company. Since Connecting Company does not expect further collections from Helena Company, this amount is credited to the allowance for doubtful accounts. The journal entry for this transaction would be: Cash $6,000 Allowance for Doubtful Accounts $6,000 On December 31, Connecting Company estimates that 0.5% of its $1,900,000 credit sales would be uncollectible. This means that they expect $9,500 ($1,900,000 x 0.5%) of their accounts receivable to be uncollectible. The journal entry to record this estimation would be: Bad Debt Expense $9,500 Allowance for Doubtful Accounts $9,500 To determine the balance of the allowance for doubtful accounts at December 31, we need to add up the four journal entries above: Beginning balance (January 1) = $8,000 credit September 7 write-off = $8,100 debit October 15 write-off = $2,500 debit November 9 collection = $6,000 credit December 31 estimation = $9,500 debit The total debits to the allowance account are $20,100 ($8,100 + $2,500 + $9,500). The total credits are $6,000. Therefore, the balance of the allowance for doubtful accounts at December 31 is a $14,100 debit ($8,000 + $20,100 - $6,000).