Question

Signoff Lamp Company had the following balances at December 31, 2018, before the year-end adjustments: (Click the icon to view the balances and accounts receivable aging schedule.) Requirements 1. Journalize Signoff's entry to record bad debts expense for 2018 using the aging-of-receivables method. 2. Prepare a T-account to compute the ending balance of Allowance for Bad Debts. Requirement 1. Journalize Signoff's entry to record bad debts expense for 2018 using the aging-of-receivables method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts Debit Credit Dec. Requirement 2. Prepare a T-account to compute the ending balance of Allowance for Bad Debts. Allowance for Bad Debts 0 Data Table Accounts Receivable 80,000 Allowance for Bad Debts 1,779 Adjustment Beginning Balance Ending Balance The aging of accounts receivable yields the following data: Age of Accounts Receivable 0-60 Days Over 60 Days Total Receivables Accounts Receivable $ 75,000 $ 5,000 $ 80,000 Estimated percent uncollectible x 3% x 15% Print Done

Answer 1

Solution 1:

Estimated uncollectibles = 75000*3% + 5000*15% = $3,000

Bad debt expense = $3000 - unadjusted balance of allowance account

= $3000 - $1779 = $1,221

Date	Accounts	Debit	Credit
31-Dec	Bad debt expense	$1,221
	Allowance for bad debts		$1,221

Solution 2:

Allowance for bad debts

		1779	Beginning balance
		1221	Adjustment
		3000	Ending balance