Question

Problem 7-5

Presented below is information related to the Accounts Receivable accounts of Blossom 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		$171,900			1%
60–90 days		135,300			3%
91–120 days		39,500	*		5%
Over 120 days		22,800			$3,700 definitely uncollectible; estimated remainder uncollectible is 23%
		$369,500

*The $3,500 write-off of receivables is related to the 91-to-120 day category

2. The Accounts Receivable control account has a debit balance of $369,500 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 $3,500 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		3,500	Jan. 1		Beginning balance		9,600
					Dec. 31		5% of $369,500		18,475

5. A credit balance exists in the Accounts Receivable (60–90 days) of $4,900, which represents an advance on a sales contract.

Assuming that the books have not been closed for 2017, make the necessary correcting entries. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2017
	(To correct bad debt expense and write off accounts receivable)
Dec. 31, 2017
	(To reclassify credit balance in accounts receivable)
Dec. 31, 2017
	(To write off uncollectible accounts)
Dec. 31, 2017
	(To reduce allowance for doubtful account balance)

show list of accounts

Accounts Payable
Accounts Receivable
Advertising Expense
Allowance for Doubtful Accounts
Bad Debt Expense
Cash
Cash Over and Short
Due from Factor
Due to Customer
Discount on Notes Payable
Discount on Notes Receivable
Freight-In
Freight-Out
Gain on Disposal of Land
Interest Expense
Interest Payable
Interest Receivable
Interest Revenue
Inventory
Land
Loss on Sale of Receivables
Miscellaneous Expenses
No Entry
Notes Payable
Notes Receivable
Office Expense
Owner's Drawings
Petty Cash
Postage Expense
Purchase Discounts
Recourse Liability
Sales Discounts
Sales Discounts Forfeited
Sales Revenue
Service Revenue
Supplies
Supplies Expenses
Unearned Sales Revenue

Answer 1

Blossom Inc. Aging Schedule 1% Debit in $ Credit in $ 3500 3500 Journal Enteries Trans. Particulars 1 Bad Debt Expense a/c Dr. To Accounts Receivable (To correct bad debt expense and write off accounts receivable) Age Balance Under 60 days 171900 60-90 days 135300 + 4900 91-120 days 39500 - 3500 Over 120 days 22800 - 3700 3% 171900 140200 36000 19100 5% 23% 1719 4206 1800 4393 12118 I 2 Accounts Receivable a/c Dr. 4900 To Unearned Revenue (To reclassify credit balance in accounts receivable) 4900 3 Allowance for Doubtful Accounts Dr. 3700 To Accounts Receivable (To write off $3,700 of uncollectible accounts) 3700 4 Allowance for Doubtful Accounts Dr. 8757 To Bad Debt Expense (To reduce allowance for doubtful account balance) 8757 Balance ($9,600 + $18,475-$3,500 - $3,700) Corrected balance (see below) Adjustment 20875 12118 8757