Purchase Solution

Journal entries - Bad Debt Expense

Not what you're looking for?

Ask Custom Question

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

Attachments
Purchase this Solution

Solution Summary

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

Purchase this Solution


Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Motivation

This tests some key elements of major motivation theories.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.