Question

Exercise 225 The Kingbird, Inc. uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 5% of accounts receivable will eventually be uncollectible. Selected account balances at December 31, 2021, and December 31, 2022, appear below 12/31/2021 $417,500 12/31/2022 Net Credit Sales $550,000 85,000 Accounts Receivable 140,000 4,800 Allowance for Doubtful Accounts Record the following events in 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Determined that the account of Kurt West for $900 is uncollectible Aug. 10 Sept. 12 Determined that the account of Jill Lynch for $3,000 is uncollectible. Oct. 10 Received a check for $400 as payment on account from Kurt West, whose account had previously been written off as uncollectible. Account Titles and Explanation Date Debit Credit (To reinstate Kurt West account previously written off) (To record collection)

Answer 1

Part 1:

Account titles and explanation Debit Credit Date Allowance for doubtful accounts Aug. 10 900 Accounts receivable-Kurt West 900 Allowance for doubtful accounts Accounts receivable-Jill Lynch Sept. 12 3,000 3,000 Accounts receivable-Kurt West Oct. 12 400 Allowance for doubtful accounts 400 Cash 400 Accounts receivable-Kurt West 400

Part 2:

Allowance for doubtful accounts bal. before adjustment 4,800-900-3,000+400 1,300 Account titles and explanation Bad debt expense (5%x140,000)-1,300 Debit Credit Date Aug. 10 5,700 Allowance for doubtful accounts 5,700

Part 3:

Balance of allowance for doubtful accounts at Dec. 31, 2022 5%x140,000 7,000