Question

Exercise 8-3

At the beginning of the current period, Bramble Corp. had balances in Accounts Receivable of $196,800 and in Allowance for Doubtful Accounts of $9,510 (credit). During the period, it had net credit sales of $864,300 and collections of $687,610. It wrote off as uncollectible accounts receivable of $6,804. However, a $3,219 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $24,000 at the end of the period. (Omit cost of goods sold entries.)

Answer 1

No.	Account Titles and Explanation	Debit	Credit
a	Accounts receivables	$864,300
	Sales Revenue		$864,300
	(To record sales)
	Cash	$687,610
	Accounts receivables		$687,610
b	Allowance for Doubtful Accounts	$6,804
	Accounts Receivable		$6,804
c	Accounts Receivable	$3,219
	Allowance for Doubtful Accounts		$3,219
	(To reinstate account previously write – Off)
	Cash	$3,219
	Accounts Receivable		$3,219
d	Bad Debt Expense        [Refer working Note below]	$18,075
	Allowance for Doubtful Accounts		$18,075
	(To record bad debts expense for the year)

.

.

Working Note - Calculation of bad debt expense for the year
Beginning balance in allowance for Doubtful accounts	$9,510
Less: Accounts written-off during the year	$6,804
	$2,706
Add: Reversal of write-off during the year	$3,219
Balance in allowance for Doubtful accounts before adjusting entry for bad debt   (a)	$5,925
Balance in allowance for Doubtful accounts after adjusting entry for bad debt    (b)	$24,000
Bad debt expense for the year          (b - a)	$18,075