Account Titles and Explanation Debit Credit Account Titles and Explanation Debit

Question

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

(To reverse write off of account receivable.)

Problem 8-4A Pukalani Ltd. prepares an aging schedule for its accounts receivable at the end of each month and records bad debts expense monthly. The following selected information is from Pukalani’s partial aging schedule at the end of July:
Number of Days
Outstanding Accounts Receivable Estimated Percentage
Uncollectible 0–30 days $727,000 2% 31–60 days 344,000 6% 61–90 days 106,000 13% Over 90 days 71,000 24% Total $1,248,000
The unadjusted balance in Allowance for Doubtful Accounts is a credit of $12,950.

Explanation / Answer

Answer: a.

Answer: b.

Journal Entries for Above Bad debt

(a) Bed Debt A/c dr. $66000

To Provision for Doutful A/c $12950

To Debtor's A/c $53050

(Being Bed debt has been created in the books)

(b) Profit and Loss A/c dr. $66000

To Bed Debt A/c $66000

(Being bed deft write off in profit and loss account)

Answer: C.

Yes the journal entry will be as under if there is debit balance in Provision of doubtful Account

Journal Entry

(a) Bed Debt A/c dr. $78950

To Provision for doubtful A/c $12950

To Bed debt A/c $66000

(Being Bed debt write-off)

(b) Profit and Loss A/c dr. $78950

To bed debt A/c $78950

(Being bed debt recognised in P/L)

Answer: D.

Journal entry for the month of August

(a) Bed Debt A/c dr. $45480

To Debtor's A/c $45480

(Being Bed debt Write-off)

(b) Profit And Loss A/c dr. $45480

To Bed Debt A/c $45480

(Being Amount of Bed debt Recognised)

Answer: E.

Journal entry

(a) Debtor's A/c dr. $9730

To bed debt Recovery A/c $9730

(Being Amount of Bed debt revesed)

(c) Bed debt recovery A/c dr. $9730

To Profit and loss A/c $9730

(Being Amout recognised in P/L)

Note:

as per Question amount is collectible it has not yet collected, when amount will be received then there will be one more entry i.e.

Bank A/c dr $9730.

To Debtor's A/c $9730

Calculation of Bed debt Number of Days Accounts Receivable Estimated Percentage Estimated Uncollectible
Accounts Outstanding Uncollectible 0–30 days $727,000 2% $14,540 31–60 days 344,000 6% $20,640 61–90 days 106,000 13% $13,780 Over 90 days 71,000 24% $17,040 Total $1,248,000 Total Bed debt $66,000 Less: Balance in Doubtful A/c $12,950 Balance to be write-off $53,050

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