Question

Chapter 7 Second Problem Before adjusting its accounts on December 31, Year 1, RMS Co. had a $200,000 balance in its Accounts Receivable account and a $4,000 credit balance in its Allowance for Doubtful Accounts account. RMS Co. estimates that 5% of its accounts receivable ending balance will be uncollectible. Prepare the journal entry to recognize Uncollectible Account Expense Accounts Receivable 200,000 Allowance for Doubtful Accounts 4,000 Amount Number of Days Past Due Current 0-30 31-60 61-90 Over 90 Days $ 9,000 6,000 3,000 2,000 2,200 Percent Likely to Allowance Balance be collected Needed 1% 5% 10% 20% 60% $ Chapter 7 Third Problem Using the aging of receivables schedule above, tell me what the journal entry would be to recognize Uncollectible Accounts Expense assuming you already have $1000 in your Allowance for Doubtful Accounts.

Chapter 7

Answer 1

	Second PROBLEM
	Closing balance required in Allowance for doubtful accounts	10000	(200000*5%)
	Already have balnce in Allowance for doubtful accounts	-4000
	More amount to be debited to bad debt expense	6000
Date	Accounts Title and Explanation	Debit	Credit
Dec-31	Bad debt Expene	6000
	Allowance for doubtful accounts		6000
	(To record bad debt Expense)
	ThIrd PROBLEM
	No. of days past Due	Amont	Percent likely to be collected	Allowance balance needed
	Current	9,000	1%	90
	0-30	6,000	5%	300
	31-60	3,000	10%	300
	61-90	2,000	20%	400
	Over 90 days	2,200	60%	1,320
	Total allowance needed			2,410
	Less: already have balance			(1,000)
	More amount to be debited tp bad debt expense	1,410
Date	Accounts Title and Explanation	Debit	Credit
Dec-31	Bad debt Expene	1,410
	Allowance for doubtful accounts		1,410
	(To record bad debt Expense)