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Journal entries for bad debts

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1.) Journalize the following transaction using the direct write-off method of accounting for uncollectible receivables.

July 01 Received $1,500 from Jane Zeeba in partial payment of the amount owed. The remaining balance of $3,500 was written off as uncollectible.

Oct 15 Reinstated the account of Jane Zeeba and received $3,500 cash in full payment.

2.)Journalize the following transaction using the allowance method of accounting for uncollectible receivables.

July 01 Received $1,500 from Jane Zeeba in partial payment of the amount owed. The remaining balance of $3,500 was written off as uncollectible.

Oct 15 Reinstated the account of Jane Zeeba and received $3,500 cash in full payment

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Solution Summary

Journal entries for uncollected amounts under direct method and allowance method

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Journal Entries

Problem #1

Presented below is an aging schedule for Lewis Company.
Customer Total: Not Yet Due: Number of Days Past Due
1-30 31-60 61-90 Over 90
Anders $20,000 $9,000 $11,000
Baietto 30,000 $30,000
Cyrs 50,000 15,000 5,000 $30,000
DeJong 38,000 $38,000
Others 126,000 92,000 15,000 13,000 6,000
$264,000 $137,000 $29,000 $24,000 $30,000 $44,000
Estimated Percentage Uncollectible 2% 5% 10% 24% 50%
Total Estimated Bad Debit $35,790 $2,740 $1,450 $2,400 $7,200 $22,000

At December 31, 2006, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $8,000

Instructions:
(a) Journalize and post the adjusting entry for bad debts at December 31, 2006.
Total Estimated Bad Debit Amount Debit / Credit
Current balance of Allowance for Doubtful Accounts Amount Debit / Credit
Required journal entry value Formula Debit / Credit

12/31/06 Account title Amount
Account title Amount

(b) Journalize and post to the allowance account the following events and transactions in the year 2007.
(b)(1) March 1, an $1,100 customer balance originating in 2006 is judged uncollectible.
03/01/07 Account title Amount
Account title Amount

(b)(2) May 1, a check for $1,100 is received from the customer whose account was written off as uncollectible on March 1.
05/01/07 Account title Amount
Account title Amount

05/01/07 Account title Amount
Account title Amount

(c) Journalize the adjusting entry for bad debts on December 31, 2007. Assume that the unadjusted balance in Allowance for Doubtful
Accounts is a debit of $1,200 and the aging schedule indicates that total estimated bad debts will be $31,300
Total Estimated Bad Debit Amount Debit / Credit
Current balance of Allowance for Doubtful Accounts Amount Debit / Credit
Required journal entry value Formula Debit / Credit

12/31/07 Account title Amount
Account title Amount
($31,300 + $1,200)
Bad Debts Expense
Date Explanation Ref. Debit Credit Balance
12/31/06 Amount Formula
($31,300 + $1,200)
Allowance for Doubtful Accounts
Date Explanation Ref. Debit Credit Balance
12/31/06 Amount Formula
12/31/06 Amount Formula

12/31/07 Amount Formula
12/31/07 Amount Formula

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