Exercise 3- Bad debt expense using the aging of account receivable method: Gabi
ID: 2540336 • Letter: E
Question
Exercise 3- Bad debt expense using the aging of account receivable method: Gabi Inc. uses the aging of accounts receivable method to determine bad debt expense. The following information regarding the fiscal year 2017 is provided Accounts Receivable, end S300,000 $50,000 $6,000 Days Outstandin Under 90 da 90 to 180 da Over 180 da Estimated Loss Rate 2% 10% 30% Beginning of period allowance for uncollectible accounts: $7,000 Actual write-offs of bad debt during the period: $1,000 Required: 1. 2. Provide the journal entry for the actual write-offs of uncollectible debt during the year Record the adjusting entry for bad debt expense in 2017.Explanation / Answer
Journal entry :
Allowance for doubtful accounts should be (300000*2%+50000*10%+6000*3%) = 12800
Allowance for doubtful account is (7000-1000) = 6000
Date accounts & explanation debit credit Allowance for doubtful accounts 1000 Account receivable 1000 (To record actual write off) Bad debt expense (12800-6000) 6800 Allowance for doubtful accounts 6800 (To record adjusting entry)Related Questions
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