Journalize entries to record transactions related to bad debts Presented below i

Question

Journalize entries to record transactions related to bad debts Presented below is an aging schedule for Halleran Company. Number of Days Past Due Customer Total Not yet Due 1-30 31-60 61-90 Over 90 Anders $22,000 $10,000 $12,000 Blake 40,000 $40,000 Coulson 57,000 16,000 6,000 35,000 Deleon 34,000 34,000 Others 132,000 96,000 16,000 14,000 6,000 $285,000 $152,000 $32,000 $26,000 $35,000 $40,000 Estimated Percentage Uncollectible 3% 6% 13% 25% 50% Total Estimated Bad Debts $38,610 $4,560 $1,920 $3,380 $8,750 $20,000 At December 31, 2015, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $12,000. Instructions: (a) Journalize and post the adjusting entry for bad debts at December 31, 2015. (b) Journalize and post the allowance account the following events and transactions in the year 2016. (1) On March 31, a $1,000 customer balance originating in 2015 is judged uncollectible. (2) On May 31, a check for $1,000 is received from the customer whose account was written off as uncollectible on March 31. ( c) Journalize the adjusting entry for bad debts on December 31, 2016, assuming that the unadjusted balance in the Allowance for Doubtful Accounts is a debit of $800 and the aging schedule indicates that total estimated bad debts will be $31,600.

Explanation / Answer

Answer a. Journal Entry Date Particulars Dr. Amt Cr. Amt a. Bad debts                                                    Dr.          26,610    To Allowance for Doubtful Account          26,610 (Record the adjusting entry for allowance for doubtful accounts) Allowance for Doubtful Debts By balance C/f          12,000 To Balance C/f          38,610 By Bad Debts (Bal Fig.)          26,610          38,610          38,610 Answer b. Date Particulars Dr. Amt Cr. Amt 1 Allowance for Doubtful Accounts     Dr.            1,000    To Accounts Receivables            1,000 (record the adjusting entry for Accounts receivables not collectible.) 2 Accounts Receivables                            Dr.            1,000     To Allowance for Doubtful Accounts            1,000 (record the adjusting entry for Accounts receivables to be collectible written off earlier) 3 Cash                                                               Dr.            1,000    To Accounts Receivables            1,000 (Record the amount received from account receivables) Answer c. Date Particulars Dr. Amt Cr. Amt 1 Bad debts                                                     Dr.          32,400    To Allowance for Doubtful Account          32,400 (Record the adjusting entry for allowance for doubtful accounts) Allowance for Doubtful Debts To Balance b/f                800 By Bad Debts (Bal Fig.)          32,400 To Balance C/f          31,600          32,400          32,400

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