The following represents selected information taken from a companys aging schedule to estimate uncollectible accounts receivable at
Question:
The following represents selected information taken from a company’s aging schedule to estimate uncollectible accounts receivable at year-end.
BS iciucy > Worksheet.xls Home| Insert Page Layout Formulas Data " Review View — Maleate pee i Se ee eee P18 ee Number of Days Outstanding Total 0-30 31-60 61-90 91-120 Over120 Accounts receivable $383,000 $220,000 $90,000 $40,000 $18,000 $15,000
% uncollectible 1% 3% 5% 8% 10%
Estimated bad debts Instructions
(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 allowance method and the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $1,600 credit.
(c) Of the above accounts, $1,100 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts.
(d) The company subsequently collects $700 on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
(e) Explain how establishing an allowance account satisfies the expense recognition principle.
Step by Step Answer:
Financial Accounting
ISBN: 9780470929384
8th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, J. Mather