Allowance for Uncollectible Accounts Journal Entry

The journal entry for the Allowance for Uncollectible Accounts involves debiting Bad Debt Expense and crediting Allowance for Uncollectible Accounts. This entry is made to reflect the estimated amount of accounts receivable that are unlikely to be collected. By recording Bad Debt Expense as an operating expense on the income statement and increasing Allowance for Uncollectible Accounts as a contra-asset on the balance sheet, the entry helps in accurately reporting the net realizable value of accounts receivable. Adjustments in this account ensure financial statements present a realistic portrayal of potential losses from non-paying customers.