During 2019, Hungryman had $18,800,000 of credit sales, collected $17,945,000 of accounts receivable, and wrote off $60,000 of accounts receivable as uncollectible. At year end, Hungryman performs an aging of its accounts receivable balance and estimates that $52,000 will be uncollectible.1. Calculate Hungryman's preadjustment balance in accounts receivable on December 31, 2019.
2. Calculate Hungryman's preadjustment balance in allowance for doubtful accounts on December 31, 2019.
3.Prepare the necessary adjusting entry for 2019

1. Hungryman's preadjustment balance in accounts receivable on December 31, 2019 is $795,000

2. Hungryman's preadjustment balance in allowance for doubtful accounts on December 31, 2019 is zero or nil.

3. The necessary adjusting entries for 2019 are

Debit Bad debt expense   $52,000

Credit Allowance for doubtful debt  $52,000

Explanation:

Allowance for doubtful debt refers to the amount receivable that may be uncollectible. The debts that went bad without an initial recognition in the doubtful debt account is deducted directly from the accounts receivable.

Given that Hungryman had $18,800,000 of credit sales, collected $17,945,000 of accounts receivable, and wrote off $60,000 of accounts receivable as uncollectible.

The unadjusted or preadjustment balance in accounts receivable on December 31, 2019

= $18,800,000 - $17,945,000 - $60,000

= $795,000

Given that at year end, Hungryman performs an aging of its accounts receivable balance and estimates that $52,000 will be uncollectible. This will be the allowance for doubtful accounts on December 31, 2019 after adjustments. Prior to adjustments, the balance in the account is zero.

Necessary adjusting entries

Debit Bad debt expense   $52,000

Credit Allowance for doubtful debt  $52,000

Being entries to record estimates of account receivables that will not be collectible.

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