EX 9-12 Entry for uncollectible accounts

Using the data in Exercise 9-11, assume that the allowance for doubtful accounts for
Imperial Bikes Co. had a debit balance of $1,400 as of December 31, 2012.
Journalize the adjusting entry for uncollectible accounts as of December 31, 2012.

Answer:
2012
Dec. 31
Bad Debt Expense............................................. 40,000  
                Allowance for Doubtful Accounts...............  40,000    
                    Uncollectible accounts estimate.    
                    ($38,600 + $1,400)

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