Answer:
The needed adjusting entry is:
Dr Bad debt expense $980
Cr Allowance for uncollectible accounts $980
Explanation:
The new provision for uncollectible accounts is $1,770 (1.5%*$118,000), which implies that the balance required in the allowance for uncollectible accounts at the end of the year is $1,770 credit balance.
From all indications, the opening balance in the allowance for uncollectible accounts is $790 and only requires a credit entry of $980 to bring it up to $1,770, the expected closing balance.
As a result of the above, the required adjusting entry for uncollectibles is as follows:
Dr Bad debt expense $980
Cr Allowance for uncollectible accounts $980
