Question

The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2016: Total Accounts Receivable $128,000 $90,700 $55,100 $33,300 Number of Days Unpaid Historical % Uncollectible Not yet due 1-30 days past due 31-60 days past due Over 60 days past due 5% 10% 16% 35% Required: a. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,397 on July 31, 2016. Prepare the required adjusting entry to record Bad Debt Expense for the year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet

Answer 1

	(a)
	Date	Account Titles and Explanation	Debit	Credit
	July 31 2016	Bad Debt expenses	$    6,544
		Allowance for doubtful accounts		$   6,544
		(being adjustment for bad debts recorded)
	Number of days	Total accounts receivables	Historical uncollectibles	Allowance for doubtful accounts
	Not yet due	$                                                                    1,28,000	5%	$   6,400
	1 - 30 days past due	$                                                                       90,700	10%	$   9,070
	31 - 60 days pat due	$                                                                       55,100	16%	$   8,816
	Over 60 days pat due	$                                                                       33,300	35%	$ 11,655
	Total			$ 35,941
Less:	Allowance for Doubtful Debts (Credit Balance)			$ 29,397
	Allowance to be created (Credit balance)			$   6,544
	(b)
	Date	Account Titles and Explanation	Debit	Credit
	August 15 2016	Allowance for doubtful accounts	$    3,231
		Accounts receivables		$   3,231
		(Being uncollectible accounts set off)
	(c)
	Allowance for Doubtful accounts
				$ 29,397	Balance
				$   6,544	Adjustment
	August 15 2016	Uncollectible accounts set off	$    3,231
				$ 32,710	Balance