Question

The Accounts Receivable balance for Lantana Company at December 31, 2017, was $26,000. During 2018. Lantana earned revenue of $460,000 on account and collected $329,000 on account. Lantana wrote off $6,200 receivables as uncollectible. Industry experience suggests that uncollectible accounts will amount to 3% of accounts receivable. Read the requirements Requirement 1. Assume Lantana had an unadjusted $2,300 credit balance in Allowance for Bad Debts at December 31, 2018. Journalize Lantana's December 31, 2018, adjustment to record bad debts expense using the percent-of-receivables method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit Dec. 31 Requirement 2. Assure Lantana had an unadjusted $2,000 debit balance in Allowance for Bad Debts at December 31, 2018. Joumalize Lantana's December 31, 2018, adjustment to record bad debts expense using the percent-of-receivables method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit Dec. 31

Answer 1

Answer

• Requirement 1

Date	Accounts title	Debit	Credit
31-Dec	Bad Debt Expense	$2,224
	Allowance for Doubtful Accounts [($150800 x 3%) - $2300 Credit balance]		$2,224

• Requirement 2

Date	Accounts title	Debit	Credit
31-Dec	Bad Debt Expense	$6,524
	Allowance for Doubtful Accounts [($150800 x 3%) + $2000 Dedit balance]		$6,524

• Calculation of Accounts receivables of $ 150800
  = 26000 + 460000 – 329000 – 6200
  = $ 150,800