SOLUTION : 1 | ||||
CALCULATION OF PROVISION OF BAD DEBTS FOR THE YEAR END | ||||
Age Group | Amount | % | Expense Value | |
Not yet due | $ 3,96,400 | 2.00% | $ 7,928 | |
1-30 day days past due | $ 2,77,800 | 4.00% | $ 11,112 | |
31-60 Days of past due | $ 48,000 | 8.50% | $ 4,080 | |
61-90 Days of past due | $ 6,600 | 39.00% | $ 2,574 | |
Over 90 Days past Due | $ 2,800 | 82.00% | $ 2,296 | |
$ 27,990 | ||||
SOLUTION : 2 | ||||
Allowance for Doubtfull Debts (Opening Bal.) | $ 3,400 | Debit | ||
Add: Provision for the Allowance of Bad debts = | $ 27,990 | Credit | ||
Balance need to be provission for the year | $ 31,390 | Credit | ||
So we can show the bad debts expenses for the year = | $ 31,390 | |||
Journal Entries | ||||
Date | Account Title and explanation | Debit | Credit | |
Bad Debt Expenses | $ 31,390 | |||
Dec 31, 2017 | To Allowance for Doubtful Debts | $ 31,390 | ||
(To Record the allowance for Doubtfull Debts for the year End) | ||||
SOLUTION : 3 | ||||
From one customer $ 3,455 recivable is uncollectable , journal entry of the same will be as below, | ||||
Entry of the same will be passed as below, | ||||
Journal Entries | ||||
Date | Account Title and explanation | Debit | Credit | |
Allowance for Doubtful Debts | $ 3,455 | |||
July 31, 2018 | Account Receivable | $ 3,455 | ||
IT means write off the uncollectable amount will not affect revenue account | ||||
Answer = No effect on Net income of the year 2018 | ||||
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