Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a

Question

Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $369,000 in its Accounts Receivable account and a credit balance of $4,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $374,000 in debit balances and $5,000 in credit balances. The company aged its accounts as follows:

Current $304,000 0–60 days past due 44,000 61–180 days past due 18,000 Over 180 days past due 8,000 $374,000 a. General Journal Date Description Debit Credit Dec.31 Bad Debts Expense 0 X C) 0) Allowance for Doubtful Accounts To record allowance for credit losses. b. Current Assets: Accounts Receivable +374,000 Less: Allowance for Doubtful Accounts 0 X Current Liabilities: 0 X Customers' Overpayments

Explanation / Answer

a.  Adjusting entry to record the allowance for doubtful accounts for the year is as shown below:

b.

Treatment of Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet is as shown below:

Date Particulars L.F Amount ($) Amount ($) Dec-31 Bad Debts (Working 1) 7,480 Allowance for doubtful accounts 7,480 (For bad debt created)

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