Molina Company had a $800 credit balance in Allowance for Doubtful Accounts at D
ID: 2528010 • Letter: M
Question
Molina Company had a $800 credit balance in Allowance for Doubtful Accounts at December 31, 2015, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:
Estimated Percentage
Uncollectible
Current Accounts $120,000 1%
1–30 days past due 20,000 3%
31–60 days past due 10,000 6%
61–90 days past due 10,000 12%
Over 90 days past due 8,000 30%
Total Accounts Receivable $168,000
(a) Prepare the adjusting entry on December 31, 2015, to recognize bad debt expense.
(b) Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 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 2015 were $550,000, and that Allowance for Doubtful Accounts had a $650 credit balance before adjustment. Prepare the adjusting entry for the current year's provision for bad debts.
Explanation / Answer
ANS :- Bad debt expenses.....dr. 5,300
To Allowance for Doubtful Accounts
($6,000* –$700) 5,300
==>> *($120,000 x1%) + ($20,000 x3%) + ($10,000 x6%) + ($10,000 x12%) + ($8,000 x30%)
(b) Bad debt expense. ....dr. 6,500. To Allowance for Doubtful Accounts
($6,000 + $500) 6,500 (c) Bad Debt Expense ($550,000 × 1%) ..dr. 5,500
To. Allowance for Doubtful. 5,500
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.