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    Adjusting entries for Bad Debt Expense

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    7. The following information is provided for the Lurkins Company as of December 31, 2006, before adjusting entries were made.

    Net credit sales $4,000,000
    Allowance for Uncollectible Accounts
    (credit balance) 4,000

    Management prepared the following aging of accounts receivable at
    December 31, 2006.
    Percentage
    Age Total Estimated Uncollectible
    Current $350,000 10%
    31-60 days 100,000 15%
    61-90 days 80,000 20%
    91-120 days 70,000 30%
    Over 120 days 40,000 50%

    Required:

    a. Prepare the adjusting entry to record Bad Debt Expense at
    December 31, 2006.
    b. What is the ending balance in the Allowance for Uncollectible Accounts
    after the adjusting entry on December 31, 2006, has been made?
    c. Determine Net Accounts Receivable at December 31, 2006, before the
    adjusting entry is made.
    d. Determine Net Accounts Receivable at December 31, 2006, after the adjusting entry has been made.
    e. How would your entry be affected in a. above if the allowance account contained a debit balance for $4000 before the adjusting entry is recorded (instead of a credit).

    © BrainMass Inc. brainmass.com June 3, 2020, 9:40 pm ad1c9bdddf
    https://brainmass.com/business/the-adjusting-process/adjusting-entries-for-bad-debt-expense-193824

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    Solution Preview

    For your convenience, I have attached a formatted MS Excel spreadsheet containing the information printed below. Feel free to contact me in the future in the event that additional assistance is required.

    7 The following information is provided for the Lurkins Company as of December 31, 2006, before adjusting entries
    were made.

    Net Credit Sales 4,000,000
    Allowance for Uncollectable Accounts (Credit Balance) 4,000

    Management prepared the following aging of accounts receivable at December 31, 2006.

    Percentage
    Estimated Uncollectable
    Age Total Uncollectable (Bad) Debt
    Current $350,000 10% $35,000
    31-60 days 100,000 15% $15,000
    61-90 ...

    Solution Summary

    This posting contains a formatted MS Excel spreadsheet which illustrates how to create adjusting entries for bad debt expense, and for the recording of uncollectable accounts.

    $2.19

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