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calculatinf bad debt expense/allowance for doubtful accounts ACCOUNTING 2030 CHAPTER 8 HANDOUT Calculating Bad Debt Expense/Allowance for Doubtful Accounts At December 31, 2018, ABC Company
calculatinf bad debt expense/allowance for doubtful accounts
ACCOUNTING 2030 CHAPTER 8 HANDOUT Calculating Bad Debt Expense/Allowance for Doubtful Accounts At December 31, 2018, ABC Company prepared an aging of its Accounts Receivable, and the aging produced the following totals: Current $ 165,000 30-60 days past due 18,000 61-90 days past due 13,000 Over 90 days past due 6,500 Total Accts Receivable $202.500 For the month of December 2018, credit sales were $175,000. a. Prepare the adjusting journal entry to record bad debt expense for December, assuming that ABC uses the percentage of credit sales method and that its historical experience indicates that 1% of credit sales ultimately prove to be uncollectible. Account Debit Credit b. Prepare the adjusting journal entry to adjust the allowance for doubtful accounts for December, assuming that ABC uses the aging method. ABC's allowance for doubtful accounts has a beginning balance of $7,500, and ABC's historical experience indicates that the following percentages should be applied to each aging category: .5% of current balances, 15% of balances 30-60 days past due, 25% of balances 61-90 days past due, and 45% of balances over 90 days past due. Account Debit Credit c. Show how Accounts Receivable and the Allowance for Doubtful Accounts would be presented on ABC's December 31, 2018 balance sheet, assuming use of the aging method. Description Amount d. On February 1, 2019 of the subsequent year, ABC wrote off several accounts with balances totaling $3,000. What journal entry did ABC make to record these write-offs? Account Debit Credit e. On March 22, 2019, ABC Company collected $500 from Smith Co, which was among the accounts that ABC had written off on February 1. What entries did ABC record? Account Debit Credit Step by Step Solution
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