gnment take&inprogress-false; Show Me How eBook Entries for Bad Debt Expense Und
ID: 2543936 • Letter: G
Question
gnment take&inprogress-false; Show Me How eBook Entries for Bad Debt Expense Under the Direct Wwrite-Off and Allowance Methods The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31: June 8. Wrote off account of Kathy Quantel, $9,310. Aug. 14. Received $6,610 as partial payment on the $16,660 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the $9,310 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt. Dec. 31 Wrote off the following accounts as uncollectible (record as one journal entry): $2,700 1,680 6,420 3,720 Wade Dolan Greg Gagne Shannon Poole Receivables Balance Estimated Percent of Aging Class (Number of Days Past Due) 0-30 days 31-60 days 61-90 days $447,000 168,000 53,000 20,000 27,000 91-120 daysExplanation / Answer
Answer Part-1: Journal entry by Direct Write Off Method Journal Entries Date Account Title & Explantation Debit Credit 08-Jun Bad Debt Expense $9,310.00 Account Receivable- Kathy Quantel $9,310.00 To Record Bad debt expense 14-Aug Cash $6,610.00 Bad Debt Expense $10,050.00 Avccount receivable-RosailOakes $16,660.00 To Record cash received and bad debt expense 16-Oct Account Receivable- Kathy Quantel $9,310.00 Bad Debt Expense $9,310.00 To record reversal of Bad debt expense Cash $9,310.00 Account Receivable- Kathy Quantel $9,310.00 To record Cash received 31-Dec Bad debt Expense $15,540.00 Account receivable- Wade Dolan $2,700.00 Account Receivable-Greg Gagine $1,680.00 Account Receivable - Amber Kisko $6,420.00 Account Receivable - Shannon Poole $3,720.00 Account Receivable-Niki Spence $1,020.00 To Record Bad Debt expense 31-Dec No Entry Answer Part-2: Journal entry by Allowance Method Journal Entries Date Account Title & Explantation Debit Credit 08-Jun Allowance for Doubtful Accounts $9,310.00 Account Receivable- Kathy Quantel $9,310.00 To Record Bad debt expense 14-Aug Cash $6,610.00 Allowance for Doubtful Accounts $10,050.00 Account receivable-RosailOakes $16,660.00 To Record cash received and bad debt expense 16-Oct Account Receivable- Kathy Quantel $9,310.00 Allowance for Doubtful Accounts $9,310.00 To record reversal of Bad debt expense Cash $9,310.00 Account Receivable- Kathy Quantel $9,310.00 To record Cash received 31-Dec Allowance for Doubtful Accounts $15,540.00 Account receivable- Wade Dolan $2,700.00 Account Receivable-Greg Gagine $1,680.00 Account Receivable - Amber Kisko $6,420.00 Account Receivable - Shannon Poole $3,720.00 Account Receivable-Niki Spence $1,020.00 To Record Bad Debt expense 31-Dec Bad debt Expense $69,240.00 Allowance for Doubtful Accounts $69,240.00 To Record Bad Debt Expense ( As per W/note1 &2) W/No-1 Statement Showing Computation of Bad debt Expense Ageing Class ( Number of Days Past Dues) Receivable Balance on December31 Estimated Doubtful Account Percent Amount 0-30 Days $447,000.00 2% $8,940.00 31-60 Days $168,000.00 8% $13,440.00 61-90 Days $53,000.00 30% $15,900.00 91-120 Days $20,000.00 45% $9,000.00 More Than 120 Days $27,000.00 90% $24,300.00 Total Receivable $715,000.00 $71,580.00 W.Note-2: Computation of Bad Debt Expense Detail Amount Estimated Balance of Allowance account from Aging Schedule $71,580.00 Less: Unadjusted Credit Balance of Allowance account $2,340.00 ( $27930-$9310-$10050+$9310-$15540) Adjustment $69,240.00 Answer for Part-C: Which one is Better Bad Debt Expense as per Allowance Method: $69,240.00 Bad Debt expenseas per Direct Write off Method -$25,590.00 ( $9310+$10050-$9310+$15540) Difference $43,650.00 Rustic Income Would be Higher by $43650 as per Direct Write off Method
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