Lernig Company had total sales of $1,350,000 for the year ended December 31, 2009; of that amount, $1,000,000 was on credit. The company had a balance of $16,300 in the Allowance for Uncollectible Accounts on January 1, 2009. During the year, bad debts totaling $12,500 were written off. On December 31, 2009, Lernig made an adjusting entry to record estimated uncollectible accounts at 2.5 percent of credit sales.
Required:
(a) Prepare the appropriate year-end adjusting entry to record the uncollectible accounts expense for this company at the end of 2009.
(b) What was the balance in Allowance for Uncollectible Accounts after making the entry in part (a)?
(c) What was the balance in Uncollectible Accounts Expense after making the entry in part (a)?
(d) Why are the answers to parts (b) and (c) different?