Please answer, will rate! Exercise 3 - Bad debt expense using the aging of accou
ID: 2540203 • Letter: P
Question
Please answer, will rate!
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 ays OutstandingEstimated Loss Rate $300,000 $50,000 $6,000 Under 90 days 90 to 180 days 2% 10% 30% Over 180 days 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 should be = (300000*2%+50000*10%+6000*30%) = 12800
Allowance for doubtful account before adjusting entry = (7000-1000) = 6000
Date accounts & explanation debit Credit Allowance for doubtful account 1000 Account receivable 1000 (To record actual write off) Bad debt expense (12800-6000) 6800 Allowance for doubtful account 6800 (To record adjusting entry)