A Summary of Jarvis Company\'s December 31, 2013, accounts receivable aging sche

Question

A Summary of Jarvis Company's December 31, 2013, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:

Age Group               Amount                %

0-60 days                  $60,000             .5

61-90 days                  22,000            1.0

91-120 days                  3,000           10.0

Over 120 days              1,000            50.0

The allowance for uncollectible accounts had a balance of $1,400 on January 1, 2013. During the year, bad debts of $750 were written off.

Required:

Prepare all journal entries for 2013 with respect to bad debts and the allowance for uncollectible accounts.

Explanation / Answer

As per the sum the uncollectable accounts receivable as per tha aging schedule must be written off as bad debts for the year

Hence Bad debts shall be computed as follows:

$[(60000*0.5%)+(22000*1%)+(3000*10%)+(1000*50%)]

=$1320

Hence journal entry would be

Bad Debt expense.......Dr 1320

To Accounts receivable 1320

Bad debt.....Dr 750

To Profit and loss account 750

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