The following summarizes the aging of accounts receivable for Johnston Supplies,

Question

The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2016: Number of Days Unpaid Total Accounts Receivable Historical % Uncollectible Not yet due $126,700 4% 1-30 days past due $89,400 11% 31-60 days past due $53,800 17% Over 60 days past due $32,000 37% Required: a. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,007 on July 31, 2016. Prepare the required adjusting entry to record Bad Debt Expense for the year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Explanation / Answer

Estimated uncollectibles = (126700 *.04)+(89400*.11)+(53800*.17)+(32000*.37)

                      = 5068+ 9834+ 9146+ 11840

                         = $ 35888

Bad debt expense to be recorded = 35888 - 29007 = $ 6881

Journal entry :

Bad debt expense       Debit    6881

Allowance for doubtful account credit 6881

[Being expense recorded]

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