A summary of Klugman Company\'s December 31, 2018, accounts receivable aging sch

Question

A summary of Klugman Company's December 31, 2018, 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, 2018. During the year, bad debts of $750 were written off. Required: 1) Prepare all journal entries for 2018 with respect to bad debts and the allowance for uncollectible accounts. 2) Show the year-end balance sheet presentation for accounts receivable.

Explanation / Answer

Solution:

Journal entries

Particulars

Debit

Credit

Allowance for uncollectible accounts

750

Accounts receivable

750

Bad debt expense

670

Allowance for uncollectible accounts

670

(1320 - 750 - 1400 = 670)

Working:

60,000*0.005 + 22,000*0.010 + 3,000*0.100 + 1,000*0.500 = 1,320

Journal entries

Particulars

Debit

Credit

Allowance for uncollectible accounts

750

Accounts receivable

750

Bad debt expense

670

Allowance for uncollectible accounts

670

(1320 - 750 - 1400 = 670)

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