Question

2. Hogwarts has some outstanding accounts receivable balances (mainly from slytherin) totaling $1,000,000. Below is their aging of receivables table: Total Days outstanding 0-60 Days 61-120 Days 121-180 Days 181-365 Days 1-2 years old 2-3 years old Balance of A/R $50,000.00 $ 150,000.00 $ 200,000.00 $ 250,000.00 $ 300,000.00 $ 50,000.00 $1,000,000.00 % chance uncollectible 2% 4% 6% 8% 10% 12% On October 31", a student tells them they cannot pay their balance of $25,000. Make all the required journal entries to recognize uncollectible accounts and bad debt expense, as well as to write off any accounts receivables under the:

Answer 1

Solution:

Days Outstanding	Balance A/R	% of uncollectible	Estimated Uncollectible Accounts
0-60 days	50000	2%	1000
61-120 days	150000	4%	6000
121-180 days	200000	6%	12000
181 - 365 days	250000	8%	20000
1-2 years	300000	10%	30000
2-3 years	50000	12%	6000
Total	1000000		75000

Journal Entry
Bad Debt Expense	75000
Allowance of Doubtful Debts		75000
To recognize the uncollectible accounts
Allowance of Doubtful Debts	25000
Accounts Receivables		25000
To write off $25,000 as uncollectible