Question

At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, It has outstanding accounts receivable of $128,000, and it estimates that 5 % will be uncollectible Prepare the adjusting entry to record bad debts expense for the year ended December 31 under the assumption that the Allowance for Doubtful Accounts has: (e) a $2,176 credit balance before the adjustment. b) a $640 debit balance before the adjustment. View transaction list Journal entry worksheet 2 Prepare the adjusting entry to record bad debts expense for the year ended December 31 under the assumption that the Allowance for Doubtful Accounts has a $2,176 credit balance before the adjustment. Note: Enter debits before credits. General Journal Debit Credit Date Dec. 31 View general journal Clear entry Record entry

Answer 1

Solutions:
1)
Accounts Receivable	$128,000
Estimated bad debts	5%
Amount Uncollectible	$6,400	($128000*5%)
a) $2176 Credit balance before the adjustment:
Date	General Journal	Debit	Credit
December 31st	Bad Debt Expense	$4,224
	Allowance for Doubtful debts		$4,224
	(To Record Bad Debt expense)
	($6400 Total Uncollectibile - $2176 credit balance before adjustment)
b) $640 Debit balance before the adjustment:
Date	General Journal	Debit	Credit
December 31st	Bad Debt Expense	$7,040
	Allowance for Doubtful debts		$7,040
	(To Record Bad Debt expense)
	($6400 Total Uncollectibile + 640 debit balance before adjustment)
2)
Credit Sales	$817,000
Date	General Journal	Debit	Credit
December 31st	Bad Debt Expense ($817000*0.80%)	$6,536
	Allowance for Doubtful debts		$6,536
	(To Record Bad Debt expense)
Febuary 1st	Allowance for Doubtful debts	$409
	Accounts Receivable		$409
	(To Record writte off accounts receivable )
June 5th	Accounts Receivable	$409
	Allowance for Doubtful debts		$409
	(To Record reinstate account Written off)
June 5th	Cash	$409
	Accounts Receivable		$409
	(To Record cash receipt from customer)