Erickson Company had a $300 credit balance in Allowance for Doubtful Accounts at

Question

Erickson Company had a $300 credit balance in Allowance for Doubtful Accounts at December 31, 2017, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible Current Accounts 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due Total Accounts Receivable $170,000 15,000 12,000 5,000 9,000 $211,000 1% 3% 6% 15% 30% Prepare the adjusting entry on December 31, 2017, to recognize bad debts expense. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit

Explanation / Answer

Uncollectible amount = ($170,000 * 1 %) + ($15,000 * 3 %) + ($12,000 * 6%) + ($5,000 * 15 %) + ($9,000 * 30%)

= $6,320

Answer a Adjustment required for = $6,320 - $300 credit balance = $6 020

Journal Entry

Answer b Adjustment required for  = $6,320 + $300 debit balance = $6 620

Journal Entry

Accounts Titles & Explanation Debit ($) Credit ($) Bad Debt Expense 6 020 Allowance for Doubtful Accounts 6,020

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