Kwikdeal.com uses the allowance method to estimate uncollectible accounts receiv
ID: 2443558 • Letter: K
Question
Kwikdeal.com uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year end.
Number of Days Outstanding/Accounts receivable/% uncollectible
Total $439,800
0-30 / $228,200 / 2%
31-60 / $128,300 / 5%
61-90 / $52,300 / 6%
91-120 / $12,000 / 7%
Over 120 / $19,000 / 11%
a) Calculate the total estimated bad debts based on the above information
b) Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in the table above. Assume the unadjusted balance in the Allowance for Doubtful Accounts account is a $5,990 debit.
c)Of the above accounts, $5,860 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
d) The company collects $5,860 subsequently on a specific account that had previously been determined to be uncollectible in the question above. Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
Explanation / Answer
Calculate the total estimated bad debts based on the above information. Total $17047 0-30 $4564 31-60 $6415 61-90 $3138 91-120 $840 Over 120 $2090 Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in the table above. Assume the unadjusted balance in the Allowance for Doubtful Accounts account is a $5,990 debit. Debit - Bad debts expense 23037 Credit - Allowance for doubtful accounts 23037 Of the above accounts, $5,860 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account. Debit - Allowance for doubtful accounts 5860 Credit - Accounts receivable 5860 The company collects $5,860 subsequently on a specific account that had previously been determined to be uncollectible in the question above. Prepare the journal entry(ies) necessary to restore the account and record the cash collection. Debit - Accounts receivable 5860 Credit - Allowance for doubtful accounts 5860 (To restore the account.) Debit - Cash 5860 Credit - Accounts receivable 5860 (TO record the cash collection.)
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