Can anyone help me with this problem please? The following information pertains

Question

Can anyone help me with this problem please?

The following information pertains to Jooners on 12/31/10

Sales during year 800,000 cash

1,400,000 credit

2,200,000 Total

Accts Receivable 12/31 860,000

Allowance for Doubtful Accounts 7,000 credit balance

Outstanding Accounts

Not due 688,000

1-30 past 86,000

31-60 past 51,600

61-90 past 25,800

Over 90 8,600

% Uncollectible

Not due 2%

1-30 past 5%

31-60 past 9%

61-90 past 15%

Over 90 25%

Prepare the following entries

Adjusting entry on 12/31 after doing an aging of accounts receivable assuming the company uses the percentage of receivables approach for bad debt expense

Entry to record bad debt of $1200 from Smith Company that has gone bankrupt on 1/30

Assume the company uses % of credit sales and determines that 2% of credit sales are uncollectible prepare the adjusting entry

Explanation / Answer

Answer:

Adjusting journal entry:

12/31    Bad Debt Expense. .................................................................. 21724

                  Allowance for Doubtful Accounts ($28724 – $7000). ................................................... 21724

Answer: Provide the entry to record bad debt of $1200 from Smith Company that has gone bankrupt on 1/30

Allowance for Doubtful Accounts A/C Dr. $1200

           To Accounts Receivable                                 $1200

Answer: Assume the company uses % of credit sales and determines that 2% of credit sales are uncollectible prepare the adjusting entry .

12/31    Bad Debt Expense. .................................................................. 28000

                  Allowance for Doubtful Accounts (1400000*2%=$28000). ................................................... 28000

Condition Outstanding amount % Uncollectible Amount uncollectible Not due 688000 2% 13760 1-30 past 86000 5% 4300 31-60 past 51600 9% 4644 61-90 past 25800 15% 3870 over 90 8600 25% 2150 Total 860000 28724

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