Question

Presented below is information related to the Accounts Receivable accounts of Gulistan Inc. during the current year 2017.

1. An aging schedule of the accounts receivable as of December 31, 2017, is as follows.

Age		Net Debit Balance			% to Be Applied after Correction Is Made
Under 60 days		$172,342			1%
60–90 days		136,490			3%
91–120 days		39,924	*		6%
Over 120 days		23,644			$3,700 definitely uncollectible; estimated remainder uncollectible is 25%
		$372,400

*The $3,240 write-off of receivables is related to the 91-to-120 day category

2. The Accounts Receivable control account has a debit balance of $372,400 on December 31, 2017.

3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,240 on November 3, 2017, and a debit to Allowance for Doubtful Accounts because of a bankruptcy.

4. Allowance for Doubtful Accounts is as follows for 2017.

Allowance for Doubtful Accounts
Nov. 3		Uncollectible accounts written off		3,240	Jan. 1		Beginning balance		8,750
					Dec. 31		5% of $372,400		18,620

5. A credit balance exists in the Accounts Receivable (60–90 days) of $4,840, which represents an advance on a sales contract.

Assuming that the books have not been closed for 2017, make the necessary correcting entries.

Answer 1