Kiley Company had a $900 credit balance in Allowance for Doubtful Accounts at De
ID: 2411974 • Letter: K
Question
Kiley Company had a $900 credit balance in Allowance for Doubtful Accounts at December 31, 2005, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:
Instructions
Please identify each of your answers with the letter of the transactions you are journalizing.
(a)Prepare the adjusting entry on December 31, 2005, to recognize bad debts expense.
(b)Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $700 debit balance before the current year's provision for uncollectible accounts. Prepare the adjusting entry for the current year's provision for uncollectible accounts.
(c)Assume that the company has a policy of providing for bad debts at the rate of 1% of sales, that sales for 2005 were $500,000, and that Allowance for Doubtful Accounts had a $550 credit balance before adjustment. Prepare the adjusting entry for the current year's provision for bad debts.
Explanation / Answer
Current accounts uncollec Estimated estimated percentage baddebts Current accounts 120,000 1% 1200 1---30 days past due 12,000 3% 360 31---60 days past due 10,000 6% 600 61---90 days past due 5,000 12% 600 over 90 days past due 8,000 30% 2400 total account receivable 155,000 5160 Journal Entries No Account titles & explanations Debit Credit a) Bad debts expense 4260 Allowance for uncollectible accounts 4,260 (5160-900) b) Bad debts expense 5860 Allowance for uncollectible accounts 5,860 (5160+700) c) Bad debts expense 5000 Allowance for uncollectible accounts 5,000 (500,000*1%)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.