The following represents selected information taken from a company\'s aging sche
ID: 2462804 • Letter: T
Question
The following represents selected information taken from a company's aging schedule to estimate uncollectible accounts receivable at year-end. Instructions 1. Calculate the total estimated bad debts based on the above information. 2. Prepare the year-end adjusting journal entry to record the bad debts using the allowance method and the aged uncollectible accounts receivable determined in (a). Assume the unadjusted balance in Allowance for Doubtful Accounts is a $7, 000 credit. 3. Of the above accounts, $2, 600 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts. 4. The company subsequently collects $1, 200 on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.Explanation / Answer
Total estimated bad Bebts Accounts Recievable % uncollectible Estimated Bad Debts 107000 2% 2140 60000 5% 3000 50000 7.50% 3750 38000 10% 3800 50000 25% 12500 Total 25190 Ans 2 Bad Debt Expense 18190 Allownace for Bad debts(25190-7000) 18190 (at the close of the year the entry should be $25190 so already in allowance account has $7000 balance) Ans 3 Allowance for Doubtful Debts 2600 Accounts Receivable 2600 (Being account actually determined to be uncollectible) Ans 4 Accounts Receivable $1,200 Allowance for Doubtful Debts $1,200 (Being reversal of write-off entry) Cash $1,200 Accounts Receivable $1,200 (Being cash received from the customer)