Question: Past experience indicates that 17% of total gross Accounts Receivable will eventually be uncollectible for the Olympic Rental Company. The Allowance for Doubtful Accounts account has a credit balance of $3,000 (after adjustment) on December 31, 2019. Total gross Accounts Receivable is $100,000 on December 31, 2020.

Instructions:

a) Record the following events in 2020:

Aug 10 Determined that the Accounts Receivable of Henry Hum for $2,500 is uncollectible.

Sep 12 Determined that the Accounts Receivable of Mark Pippy for $4,000 is uncollectible.

Oct 10 Received a cheque for $1,800 as payment on account from Henry Hum, whose account had previously been written off as uncollectible. He indicated the remainder of his account would be paid in November.

Nov 15 Received a cheque for $700 from Henry Hum as final payment on his account.

b) Prepare the adjusting journal entry to record Bad Debts Expense for the year ended December 31, 2020.

c) What is the balance of the Allowance for Doubtful Accounts account (after adjustment) at

December 31, 2020?