Question

P9-3A Presented below is an aging schedule for Halleran Company. Worksheet.xls tota Review View Journalige entries to record transactions related to bad debts. (LO 2) Home Insert Page Layout Formulas XLS Not Yet Due Number of Days Past Due 1-30 31-60 61-90 Over 90 $10,000 $12,000 Customer Anders Blake Coulson Deleon Others Total $ 22,000 40,000 57.000 34,000 132,000 $285,000 $40,000 16,000 6,000 $35,000 96,000 $152,000 6,000 16.000 $32,000 $34,000 $40,000 14.000 $26,000 $35,000 10 Estimated Percentage Uncollectible Total Estimated Bad Debts 3% 4,560 6% $ 1,920 13% $3,380 25% $ 8,750 50% $20,000 $ 38,610 $ (a) Bad debt expense $26,610 At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $12,000. Instructions (a) Journalize and post the adjusting entry for bad debts at December 31, 2017 (b) Journalize and post to the allowance account the following events and transactions in the year 2018. (1) On March 31, a $1,000 customer balance originating in 2017 is judged uncollectible. (2) On May 31, a check for $1,000 is received from the customer whose account was written off as uncollectible on March 31. (c) Journalize the adjusting entry for bad debts on December 31, 2018, assuming that the unadjusted balance in Allowance for Doubtful Accounts is a debit of $800 and the aging schedule indicates that total estimated bad debts will be $31,600. (Bad debt expense $32,400

Answer 1

Allowance for doubtful account have a credit balance. it is deducted from accounts receivable to avail net receivables.

(1) Balance in allowance for account receivable=$12,000

Bad debt for 2017=$38,610

adjusting entry would be ($38,610-$12,000)=$26,610

Date
Dec 31,2017	Bad debt expense	$26,610
	Allowance for doubtful accounts		$26,610

(b)

1.we will debit bad debt expense and credit allowance for doubtful account by $1,000

March 31	Bad debt expense	$1,000
	Allowance for doubtful account		$1,000

2.WE WILL REVERSE WRITTEN OFF BAD DEBT

May 31	Account s receivable	$1,000
	allowance for doubtful account		$1,000

entry for check received

May 31	Cash	$1,000
	Accounts receivable		$1,000

C) allowance for doubtful account should have credit balance if it has debit balance that means bad debt was higher than allowance for doubtful account.

bad debt to be recorded = $31,600+$800 =$32,400

Dec 31,2018	Bad debt expense	$32,400
	Allowance for doubtful account		$32,400