Question

Marshall Ltd. prepares an aging schedule for its accounts receivable at the end of each month and records bad debts expense monthly. The following selected information is from Marshall's partial aging schedule at the end of July: Number of Days Outstanding 0-30 days 31-60 days 61-90 days Over 90 days Total Accounts Receivable $710,000 335,000 104,000 80,000 $1,229,000 Estimated Percentage Uncollectible 2% 6% 11% 22% The unadjusted balance in Allowance for Doubtful Accounts is a credit of $11,990.

Answer 1

1) Ageing Schedule

No. of Days Outstanding	Accounts Receivable	Estimated % Uncollectible	Amount uncollectible
0-30	710000	2%	14200
31-60	335000	6%	20100
61-90	104000	11%	11440
Over 90	80000	22%	17600
Total	1229000		63340

2) Adjusting Journal Entry:

Bad Debts Written off A/c_______Dr. 63340 -

To Trade Receivables - 63340

3) Entry to record bad debts when there is an unadjusted debit balance in allowance for doubtful account.

Bad debts written off A/c_______ Dr. 63340 -

To Trade Receivables - 63340

Unajusted balance in allowance for bad debts can not have a debit balance, it will either have a credit balance or a zero balance, hence if the situation mentioned is allowance account has a debit balance there will be no entry in allowance for bad debts account.

on the contrary if there is a credit balance in the allowance for bad debts account as mentioned in the first paragraph of the question, entry would be as follows-

Bad debts written off A/c______ Dr. 51350 -

Allowance for bad debts A/c_____Dr. 11990 -

To Trade Receivable A/c - 63340