Question

E5-33B. (Learning Objective 5: Apply GAAP to uncollectible accounts) Aspen Foods, Inc., experienced the following revenue and accounts receivable write-offs: Month January February March Service Revenue $ 4,300 3,200 3,500 $11,000 Accounts Receivable Write-Offs in Month January February March Totals $48 $ 94 $142 104 $ 27 131 109 109 $48 $198 $136 $382 Suppose Aspen estimates that 4% of (gross) revenues will become uncollectible. Assume all revenues are on credit. Requirement 1. Journalize service revenue (all on account), uncollectible-accounts expense, and write-offs during March. Include explanations.

Answer 1

Above question is about preparation of journal entries for service revenue, uncollectible account expense and write offs during March. Refer a below image for more detailed solution with explanation.

Requirement : Journalize service revenue (all on account), un collectible accounts expense and write offs during Date particulars credit Debit $ 3500 March Accounts To (Being to Receivable ALC or Service Revenue record revenue on account) $ 3500 $ 140 March Bad debr expense. All or To Allowance for Bad debts (Being to record exponse for the month) $ 140 Worlling: calculation of Bod debts : - $3.500 x 4-1 $3500x.04 : $140 1136 March Allowance To (Being to for Bad debrs Alc or Accounts Receivable write oft uncollectible $136 receivables). Worthing: calculation of Allowance for Bad debt: - $27 + 8109 = $ 136