James Taylor Co. has Accounts Receivable of $200,000 at February 28, 20xx. The A
ID: 2596420 • Letter: J
Question
James Taylor Co. has Accounts Receivable of $200,000 at February 28, 20xx. The Allowance for Bad Debts has a $6,000 credit balance. The company has aged the receivables and discovered that $50,000 has not reached the due date, $80,000 is between one and sixty days past the due date and the final $70,000 is over 61 days past the due date. Make the correct end of period adjusting journal entry for bad debt expense assuming 3% of the not yet due receivables are bad; 8% of the between 1-60 day receivables are worthless and 20% of the receivables older than 61 days are worthless and calculate the company’s net accounts receivable that will be reported on the balance sheet.
Explanation / Answer
Answer:
Adjusted Journal Entry : Allowance for bad debt A/c Dr. $6,000
Bad debt A/d Dr. $15,900
To Account Receivable $21,900
( Being worthless account receivables written off)
Working Note :
Particulars Account Receivable Rate of bad debt Amount of bad debt Amount not due 50,000 3% 1,500 Between one and sixty days 80,000 8% 6,400 Sixty one days or more 70,000 20% 14,000 Totals 200,000 21,900 Less: allowance for bad debts -6,000 Bad debts to be recorded 15,900Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.