The following summarizes the aging of accounts receivable for Johnston Supplies,

Question

The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2016: Number of Days Unpaid Total Accounts Receivable Historical % Uncollectible Not yet due $127,500 4% 1-30 days past due $90,200 11% 31-60 days past due $54,600 17% Over 60 days past due $32,800 35%

Required: a. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,247 on July 31, 2016. Prepare the required adjusting entry to record Bad Debt Expense for the year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

b. Johnston Supplies, Inc. writes off $3,181 of uncollectible accounts on August 15, 2016. Prepare the required adjusting entry to record the write-off. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

c. Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15, 2016.

Explanation / Answer

a.

Unadjusted balance of the Allowance for Doubtful Accounts= 29,247

Adjustment Amount = 35784 - 29247 = 6537

Journal Entry:

b.

c.

No of days Amount % of allowance Amount of allowance Not yet due 127500 4% 5100 1 -30 days 90200 11% 9922 31-60 days 54600 17% 9282 Over 60 days 32800 35% 11480 Total 35784

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