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ACCOUNTING-Wall Inc. uses the allowance method to estimate uncollectible accounts receivable. The company prod?

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ACCOUNTING-Wall Inc. uses the allowance method to estimate uncollectible accounts receivable. The company prod?

Postby garmond » Sun Mar 25, 2012 6:34 am

Wall Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year end.

Number of Days Outstanding
Total 0-30 31-60 61-90 91-120 Over 120
Accounts receivable $200,000/$77,000/$46,000/$39,000/$23,000…
% uncollectible __%?/2%/5%/8%/10%/15%
a)Calculate the total estimated bad debts based on the above information.
b)Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in the question above. Assume the current balance in Allowance for Doubtful Accounts is a $8,000 debit.
c)Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
d)The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in the question above. Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
garmond
 
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ACCOUNTING-Wall Inc. uses the allowance method to estimate uncollectible accounts receivable. The company prod?

Postby amos » Sun Mar 25, 2012 6:43 am

Total.......... .......... ....... 0-30 .. /. 31-60 ./ . 61-90./ 91-120/ Over 120
Accounts receivable $200,000/$77,000/$46,000/$39,000/$23,000
% uncollectible .......... ....2% ./ ....5% ../ ....8% ../ ...10% ./ ...15%
Amt uncollectible ...... $4,000/ $3,850/ .$3,680./$3,900/ .$3,450 ==>total $18,880

a) Calculate the total estimated bad debts based on the above information
$18,880, as above

b)Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in the question above. Assume the current balance in Allowance for Doubtful Accounts is a $8,000 debit
Dr Bad debts expense $26,880
Cr Allowance for Doubtful Accounts $26,880

c) Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
Dr Allowance for Doubtful Accounts $5,000
Cr Accounts receivable $5,000

d)The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in the question above. Prepare the journal entry(ies) necessary to restore the account and record the cash collection
Dr Accounts receivable $5,000
Cr Allowance for Doubtful Accounts $5,000
(to restore the account)

Dr Cash $5,000
Cr Accounts receivable $5,000
(to record the cash collection)
amos
 
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Joined: Mon Mar 21, 2011 6:12 am


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