Share
Explore BrainMass

Journalizing and Posting for Bad Debts

I need help in determining what amounts I need to use for the adjusting entries for bad debts and also how to journalize those when funds are collected later on as well.

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
($31,300 + $1,200)

Attachments

Solution Preview

Please see the attached file

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 ...

Solution Summary

The solution explains the calculations and journal entries relating to bad debts.

$2.19