Question

в Worksheet.xls с WN Total 0-30 $375,000 $220,000 Number of Days Outstanding 31-60 61-90 91-120 $90,000 $40,000 $10,000 4% 5% 8% Accounts receivable % uncollectible Estimated bad debts Over 120 $15,000 20% 1% 6

Instructions

(a) Calculate the total estimated bad debts based on the above information.

(b) Prepare the year-end adjusting journal entry to record the bad debts using the allowance method and the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $3,000 credit.

(c) Of the above accounts, $1,600 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts.

(d) The company subsequently collects $700 on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.

Answer 1

(a)		Number of Days Outstanding
	Total	0-30	31-60	61-90	91-120	Over 120
Account receivable	3,75,000	2,20,000	90,000	40,000	10,000	15,000
Precent uncollectible		1%	4%	5%	8%	20%
Estimated bad debts	11,600	2,200	3,600	2,000	800	3,000

Paticulars	Debit	Credit
(b) Journal entry for aged uncollectible accounts receivable.
Bed debts expense	8,600
Allowance for doubtful account		8,600
(Being entry for provision for balance of $8600 (i.e $11,600 - $3,000)
(C) Write off entry for the uncollectible amount of $1,600
Allowance for doubtful account	1600
Accounts receivable		1600
(Being entry for write off uncollectible amount of $1600)
(D) Subsequently collects $700 from uncollectible above
Accounts receivable	700
Allowance for doubtful account		700
(Being entry for reinstate the amount of $700 collected subsequently)
Cash	700
Accounts receivable		700
(Being entry for receipts of $700 collected subsequently)