References Mailings Review Vievw Aa \" AaBbCcDdEe AaBbCcDdEe AaBbCcD No Spacing

Question

References Mailings Review Vievw Aa " AaBbCcDdEe AaBbCcDdEe AaBbCcD No Spacing Heading 1 Blocker Company estimates its uncollectible accounts based on an analysis of receivables. On December 31, a junior accountads prepared the following aging schedule for the company's $88,000 in outstanding receivables. Estimated Not due 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due $58,650 13,220 8,930 4,000 4% 20% 30% 50% $88,000 The allowance for Doubtful Accounts currently has a $210 debit balance. 1. Prepare the adjusting entry to record the company's estimate of uncollectible accounts Date Accounts DR CR 12/31 2. Prepare the journal entry to write off the following accounts: T. Donaldson.700 450 1,000 D. Mize.. Date Accounts DR CR 3. Date Prepare the journal entry to record receipt of the $450 owed by J. Kyle Accounts DR CR 4. Write an answer to the following question: What circumstances would cause the Allowance for doubtful Accounts to have a debit balance prior to adjustment? tates) Focus

Explanation / Answer

Working Note for requirement 1 Aging schedule Accounts Receivable Amount Estimated percent uncollectible Allowance for doubful accounts Not due 58650 2% 1173 1-30 days 13220 4% 528.8 31-60 days 8930 20% 1786 61-90 days 4000 30% 1200 Over 90 days 3200 50% 1600 Total 88000 6287.8 Requirement 1 Dec-31 Bad-debts expense 6287.8 Allowance for doubtful accounts 6287.8 To record the adjustment for doubtful accounts expense and allowance for doubtful accounts at the year end Requirement 2 Allowance for doubtful accounts 2150 T-Donaldson(Accounts Receivable) 700 J. Kyle(Accounts Receivable) 450 D. Mize(Accounts Receivable) 1000 To record the write off of above accounts receivable Requirement 3 Cash 450 J. Kyle(Accounts Receivable) 450 To record the receipt of Cash from customer J. Kyle(Accounts Receivable) 450 Allowance for doubtful accounts 450 To record the reversal of write off as amount becomes collectible now Requirement 4 The Allowance for doubtful accounts may have debit balance before adjustment as we have written off many balances of customer which is exceeding the estimate made by us and provided accordingly in the books of accounts entry by way of passing bad-debts entry.

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