Journalize transactions related to bad debts . The following represents selected
ID: 2476461 • Letter: J
Question
Journalize transactions related to bad debts.
The following represents selected information taken from a company's aging schedule to estimate uncollectible accounts receivable at year-end.
Calculate the total estimated bad debts based on the above information.
Prepare the year-end adjusting journal entry to record the bad debts using the allowance method and the aged uncollectible accounts receivable determined in (a). Assume the unadjusted balance in Allowance for Doubtful Accounts is a $7,000 credit.
Of the above accounts, $2,600 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts.
The company subsequently collects $1,200 on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
Total Number of Days Outstanding 0-30 31-60 61-90 91-120 Over 120 Accounts receivable $305,000 $107,000 $60,000 $50,000 $38,000 $50,000 % uncollectible 2% 5% 7.5% 10% 25% Estimated bad debtsExplanation / Answer
1. Total estimated bad debts according to ageing analysis $25190.
2. Bad debt expense Account dr 25190$
allowance for doubtful accounts cr 25190$
Narration : being bad bedts recognised for the year ended by using allowance method of bad bedt accounting.
3. allowance for doubtful accounts dr 2600$
uncollectible accounts receivable account cr 2600$
Narration : Being specific bad debts are reduced from the outstanding allowance account and accordingly outstanding receivable account has been reduced.
4. a. Uncollectible account receivable account dr 1200$
allowance for doubtful accounts cr 1200$
Narration : Being reversal of specific uncollectible account which has already been credited. ( reversal of part 3) to the extent of recoverable amount.
b. cash dr 1200$
account receivable cr 1200$
Narration : Being cash received from the customer.
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