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    Journal entries - Bad Debt Expense

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    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

    © BrainMass Inc. brainmass.com June 3, 2020, 9:57 pm ad1c9bdddf
    https://brainmass.com/business/the-accounting-cycle/journal-entries-bad-debt-expense-207212

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    Solution Summary

    The solution explains the journal entries to be made for estimating the bad debt expense

    $2.19

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