For a business that uses the allownace method of accounting for uncollectible re

Question

For a business that uses the allownace method of accounting for uncollectible receivable, journalize the entires to record the following:

1) Record the adjusting entry at Decemeber 31,2010, end of the fiscal year, to record the bad debt expense. The accounts receivable has a balance of $550,000, and the allowance for the doubtful acocunts before adjustment has a credit balance of $5,500. Analysis of the receivables indicates uncollectible reeivables of $25,000.

2) In March, 2011, $2,400 owed by Fenton Co. on account is written off as uncollectible.

3) In November, 2011, $1,800 of the Fenton Co. account is reinstated and payment of that amount is received.

Thanks in advance

Explanation / Answer

1)Debit Bad debt expense [25000-5500] = 19500

Credit Allowance for doubtful accounts = 19500

2)Debit Allowance for doubtful accounts = 2400

Credit Accounts recievables = 2400

3)Debit Accounts recievables = 1800

Credit Allowance for doubtful accounts = 1800

Debit Cash = 1800

Credit Accounts recievables = 1800

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