Question

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Below is the aging of receivables schedule for Evers Industries. Aging-of-Receivables Schedule November 30 Not Past Due 1-30 Days Past Due 31-60 Days Past Due 61-90 Days Past Due Over 90 Days Past Due Customer Balance Subtotals 687,500 405,600 151,300 61,900 34,400 34,300 Boyd Industries 13,700 15,600 6,900 7,900 Hodges Company Kent Creek Inc. Lockwood Company Van Epps Company Totals Percentage uncollectible Allowance for Doubtful Accounts 13,700 15,600 6,900 7,900 28,700 28,700 760,300 434,300 1% 62,663 4,343 48,000 159,200 5% 7,960 68,800 20% 50,000 30% 45% 13,760 15,000 21,600 Assume that the allowance for doubtful accounts for Evers Industries has a credit balance of $ 13,160 before adjustment on July 31. Journalize the adjusting entry for uncollectible accounts as of July 31. July 31 Bad Debt Expense 75,823 x 0 Allowance for Doubtful Accounts 75,823 X

Answer 1

Solution

Date	General Journal	Debit	Credit
Jul 31	Bad debts expense	$        49,503.00
	Allowance for doubtful accounts		$ 49,503.00
	(To record bad debts expense)

Working

Estimated balance of allowance for uncollectables	$ 62,663.00	Cr
Balance in Allowance for uncollectable account (Cr)	$ 13,160.00	Cr
Total bad debts to be recorded	$ 49,503.00	Cr

Bad debts expense is adjusted with the unadjusted balance in allowance account. Total balance required in allowance account is $62663 but it already has $13160 so only $49503 will be recorded as bad debts so that ending balance in allowance account is equal to estimated allowance for doubtful accounts calculated in question abive.