E5-18A. (Learning Objective 5: Apply GAAP for uncollectible receivables) At December 31,2018, Waco Travel Agency has an Accounts Receivable balance of $93,000. Allowance forUncollectible Accounts has a credit balance of $870 before the year-end adjustment. Servicerevenue (all on account) for 2018 was $800,000. Waco estimates that its uncollectible-accountexpense for the year is 1% of service revenue. Make the year-end entry to record uncollectibleaccount expense. Show how Accounts Receivable and Allowance for Uncollectible Accountsare reported on the balance sheet at December 31, 2018.
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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.
E5-18A. (Learning Objective 5: Apply GAAP for uncollectible receivables) At December 31,
2018, Waco Travel Agency has an Accounts Receivable balance of $93,000. Allowance for
Uncollectible Accounts has a credit balance of $870 before the year-end adjustment. Service
revenue (all on account) for 2018 was $800,000. Waco estimates that its uncollectible-account
expense for the year is 1% of service revenue. Make the year-end entry to record uncollectibleaccount expense. Show how Accounts Receivable and Allowance for Uncollectible Accounts
are reported on the
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