Below is the \"totals\" section of XYZ Corporation\'s full ageing schedule. XYZ

Question

Below is the "totals" section of XYZ Corporation's full ageing schedule. XYZ will be using this information to estimate uncollectible accounts receivable at year-end. Number of Days Outstanding Total 0-30 31-60 6190 91-120 Over 120 375 Accounts receivable Estimate bad debts (a) Caleulate 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 allowance method and the aged uncollectible accounts reccivable (c) Prepare the year-end adjusting journal entry to record the bad debts using the allowance method and the aged uncollectible accounts receivable (d) Of the above accounts, S1,800 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts. (e) The company subsequently collects $700 on a specific account that had previously been determined to be uncollectible in (d). Prepare the journal determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $3,000 credit determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $500 debit. entry(ies) necessary to restore the account and record the cash collection. (0 In your own words, explain how establishing an allowance account satisfies the expense recognition princple Number of Days Outstanding 31-60 61-90 91-120 Over 120 Total0-30 Accounts receivable s 375,000 $ 220,000 S 90,000 s 30,000 20,000 s 15,000 196 4% 5% 9% 20% Estimate bad debts

Explanation / Answer

a. Number of days outstanding Total 0-30 31-60 61-90 91-120 Over 120 Accounts receivable 375000 220000 90000 30000 20000 15000 % uncollectible 1% 4% 5% 9% 20% Estimated baddebts 12100 2200 3600 1500 1800 3000 b. Date Account name Debit Credit Baddebt expense (12100-3000) 9100 Allowance for doubtful accounts 9100 (Baddebt expenses estimated) c. Date Account name Debit Credit Baddebt expense (12100+500) 12600 Allowance for doubtful accounts 12600 (Baddebt expenses estimated) d. Date Account name Debit Credit Allowance for doubtful accounts 1800 Accounts receivable 1800 (Write off uncollectible accounts) e. Date Account name Debit Credit Accounts receivable 700 Allowance for doubtful accounts 700 (Baddebt recovered) Cash 700 Accounts receivable 700 (Baddebt recovered)

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