Question

Analysis of Allowance for Bad Debts Boulder View Corporation accounts for uncollectible accounts receivable using the allowance method. As of December 31, 2016, the credit balance in Allowance for Bad Debts was $110,000. During 2017, credit sales totaled $10,000,000, $80,000 of accounts receivable were written off as uncollectible, and recoveries of accounts previously written off amounted to $14,000. An aging of accounts receivable at December 31, 2017, showed the following: Accounts Receivable Balance As of Percentage Estimated Classification of Receivable December 31, 2017 Uncollectible Current $1,140,000 2% 1-30 days past due 620,000 31-60 days past due 410,000 Over 60 days past due 140,000 $2,310,000 Required: 1. Prepare the journal entry to record bad debt expense for 2017, assuming bad debts are estimated using the aging of receivables method. If an amount box does not require an entry, leave it blank. Bad Debt Expense Allowance for Bad Debts V Feedback Check My Work Partially correct 2. Record journal entries to account for the actual write-off of $105,000 uncollectible accounts receivable and the collection of $14,000 in receivables that had previously been written off. If an amount box does not require an entry, leave it blank. Allowance for Bad Debts 001 Accounts Receivable To write off uncollectible accounts receivable. 01 II Accounts Receivable Allowance for Bad Debts To reinstate account balance previously written off. II b Cash Accounts Receivable To recognize collection of previously written off receivables. 1

Answer 1

working note-1 Allowance for uncollectable accounts, Beginning balance Less: Accounts receivables write off Add: Collection of accounts receivables previously written off Allowance for uncollectable accounts, Ending balance before adjustment $110,000 $(80,000 $ 14,000 $ 44,000 In case of percentage on accounts receivable "Bad debts expense" is amount to be adjusted to closing balance of "allowance for doubtful accounts" Classification of receivables Bad debts expense Current 1-30 days past due 31-60 days past due over 60 days past due Accounts receivable Percentage balance as of Dec estimated 31, 2017 uncollectable 1,140,000 2% 620,000 10% 410.000 23% 140,000 75% 2,310,000 $ 22,800 $ 62,000 $ 94,300 $105,000 $284,100 Allowance for bad debts required $ 284,100 A Balance in allowance for bad debts before adjustment $ 44,000 B Refer working note-1 Balance to be created $240,100 A-B Credit General journal Bad debts expense Allowance for bad debts Debit $240,100 $240.100

Credit Debit | $105,000 Accounts tittle Allowance for bad debts Accounts Receivables To write off uncollectable accounts receivables $ 105,000 $ 14,000 Accounts Receivables Allowance for bad debts To reinstate accounts receivables balance previously written off $ 14,000 $ 14,000 Cash Accounts Receivables To recognize collection of previously written off receivables $ 14,000