Question

B. Dec 31, 2015 the company estimated bad debts as 3% of Account Receivable. Feb 15, 2016, the company determined that it can not collect $15,000 of its account receivable from customer Aldo April 1, 2016, the company received the payment $15,000 from Customer Aldo Account Title Debit Credit Date De 31 Feb 15 Oven TTTT

** accounts receivable 575,000

allowance for DA 7500

Answer 1

Target balance = Accounts receivable × 3% = 575,000 × 3% = 17,250

Bad debt expense = Target balance – Allowance for doubtful accounts (credit)

                              = 17,250 – 7,500

                              = 9,750

Journals are as below:

Date	Account titles and explanations	Ref.	Debit	Credit
Dec. 31	Bad debt expense		$9,750
	Allowance for doubtful accounts			$9,750
	To record bad debt expense at the year-end
Feb. 15	Allowance for doubtful accounts		$15,000
	Accounts receivable			$15,000
	To record write-off of accounts receivable.
April. 1	Accounts receivable		$15,000
	Allowance for doubtful accounts			$15,000
	To record re-establishing the earlier write-off
	Cash		$15,000
	Accounts receivable			$15,000
	To record receiving of accounts receivable