Dolan Company uses the allowance method to account for uncollectible accounts. P

Question

Dolan Company uses the allowance method to account for uncollectible accounts. Prepare the appropriate journal entries to record the following transactions during 2011. You may omit journal entry explanations.

June 20 The account of Ken Watts for $1,000 was deemed to be uncollectible and is written off as a bad debt.

Oct. 14 Received a check for $1,000 from Ken Watts, whose account had previously been written off as uncollectible.

Dec. 31 Use the following information for year-end adjusting entries: The balance of Accounts Receivable and Allowance for Doubtful Accounts at year-end are a debit balance of $131,000 and a credit balance $2,900, respectively. It is estimated that bad debts will be 5% of accounts receivable.

Explanation / Answer

Journal Entry Date Particulars Dr. Amt. Cr. Amt Jun-20 Allowance for Doubtful Accounts             Dr.          1,000     To Accounts Receivables          1,000 Oct-14 Accounts Receivables                                     Dr.          1,000     To Allowance for Doubtful Accounts          1,000 Oct-14 Cash                                                                       Dr.          1,000    To Accounts Receivables          1,000 Dec-31 Bad Debts                                                           Dr.          3,650    To Allowance for Doubtful Accounts          3,650 Allowance for Dountful Accounts = 131000 X 5% - $2900 = $3650

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