P8-3B Journalize entries to record transactions related to bad debt MICROSOFT EXCEL

P8-3A Journalize entries to record transactions related to bad debts Presented below is an aging schedule for Halleran Company. Customer Anders Blake Coulson Deleon Others Number of Days Past Due Total Not yet Due 1-30 31-60 61-90 Over 90 $ 22,000 $ 10,000 $ 12,000 40,000 $ 40,000 57,000 16,000 6,000 35,000 34,000 34,000 132,000 96,000 16,000 14,000 6,000 $ 285,000 $ 152,000 $ 32,000 $ 26,000 $ 35,000 $ 40,000 Estimated Percentage Uncollectible Total Estimated Bad Debts 3% $ 38,610 $ 6% 4,560 $ 13% 1,920 $ 3,380 $ 25% 50% 8,750 $ 20,000 At December 31, 2015, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $12,000. Instructions: (a) Journalize and post the adjusting entry for bad debts at December 31, 2015. (b) Journalize and post the allowance account the following events and transactions in the year 2016. (1) On March 31, a $1,000 customer balance originating in 2015 is judged uncollectible. (2) On May 31, a check for $1,000 is received from the customer whose account was written off as uncollectible on March 31. ( c) Journalize the adjusting entry for bad debts on December 31, 2016, assuming that the unadjusted balance in the Allowance for Doubtful Accounts is a debit of $800 and the aging schedule indicates that total estimated bad debts will be $31,600. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . (a) Dec. 31 Account Value Account Value Bad Debt Date 2014 Dec. 31 Explanation Adjusting (b) (1) Debit Credit Value Allowance for Doubtful Accounts Explanation Ref. Date 2014 Dec. 31 Dec.31 2015 Mar. 31 31-May Ref. Debit Value Credit Balance Value Balance Adjusting 12,000 ? Value Value 2015 Mar. 31 Account 2015 May 31 Account Value Value Account May 31 Account Value Value Account (c) 2015 Dec 31 ? ? Value Account (b) (2) Balance Account Value Value Account Value After you have completed the requirements of P8-3A, consider these additional questions. Answers are on the other tab in this file. 1. Suppose the amount uncollectible on March 31 is changed to $1,800 and no cash was received from customer subsequent to the write-off of accounts receivable. What would be the balance of the Allowance for Doubtful Accounts before adjustment? 2. Suppose the balance in the Allowance for Doubtful Accounts before adjustment was $2,100 debit. An aging schedule indicates that total estimated bad debts will be $38,000. What is the year-end adjustment for bad debts? P8-2B Compute bad debt amounts Information related to Miracle Company for 2015 is summarized below: Total credit sales $1,000,000 Accounts receivable at December 31 369,000 Bad debts written off 22,150 Instructions: (a) What amount of bad debt expense will Miracle Company report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Miracle Company decides to estimate its bad debt expense to be 2% of credit sales. What amount of bad debt expense will Miracle record if Allowance for Doubtful Accounts has a credit balance of $3,000? (c) Assume that Miracle Company decides to estimate its bad debt expense based on 5% of accounts receivable. What amount of bad debt expense will Miracle Company record if Allowance for Doubtful Accounts has a credit balance of $4,000? (d) Assume the same facts as in (c), except that there is a $2,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Miracle record? (e) What is the weakness of the direct write-off method of reporting bad debt expense? NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . (a) Amount of bad debt expense if direct write-off method is used (b) Balance, Allowance for Doubtful Account Bad debt expense: Total credit sales Estimated bad debt percentage Total estimated bad debt expense Amount to be recorded as bad debt expense Value Balance $3,000 CR $1,000,000 2% ? ? (c ) Balance, Allowance for Doubtful Account Bad debt expense: Accounts Receivable, Dec 31 Estimated bad debt percentage Total estimated bad debt expense Amount to be recorded as bad debt expense Balance $4,000 CR Value 5% ? ? (d) Balance, Allowance for Doubtful Account Bad Debt expense: Accounts Receivable, Dec 31 Estimated bad debt percentage Total estimated bad debt expense Amount to be recorded as bad debt expense Balance $2,000 DR Value 5% ? ? After you have completed the requirements of P8-2B, consider these additional questions. Answers are on the other tab in this file. 1. Suppose that credit sales decreased to $980,000, what amount would be recorded as bad debt expense? 2. Suppose that the estimated bad debt percentage changed to 6% of accounts receivable, what amount would be recorded as bad debt expense? 3. Suppose that the Allowance for Doubtful Account balance changed to $3,500 debit and the estimated bad debt percentage changed to 6%. What amount would be recorded as bad debt expense? P8-3B Journalize entries to record transactions related to bad debts Presented below is an aging schedule for Loucks Company Number of Days Past Due Customer Total Not yet due 1-30 31-60 61-90 Alma $30,000 $13,500 $16,500 Browne 45,000 $45,000 Conlon 75,000 22,500 7,500 45,000 Dalton 57,000 Others 189,000 138,000 22,500 19,500 $396,000 $205,500 $43,500 $36,000 $45,000 Estimated Percentage Uncollectible Total Estimated Bad Debts 2% $47,970 6% $4,110 $2,610 10% $3,600 Over 90 $57,000 9,000 $66,000 25% 40% $11,250 $26,400 At December 31, 2015, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $16,000. Instructions: (a) Journalize and post the adjusting entry for bad debts at December 31, 2 015. (b) Journalize and post to the allowance account the following events and transactions in the year 2016. (1) March 1, a $1,900 customer balance originating in 2015 is judged uncollectible. (2) May 1, a check for $1,900 is received from the customer whose account was written-off as uncollectible on March 1. ( c) Journalize the adjusting entry for bad debts on December 31, 2016. Assume that the unadjusted balance in the Allowance for Doubtful Accounts is a debit of $2,000 and the aging schedule indicates that total estimated bad debts will be $38,300. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . (a) Dec. 31 Account Value Account Value (a) & (b) Bad Debt Expense Explanation Date 2015 Dec. 31 Adjusting (b) (1) Debit Credit Value Allowance for Doubtful Accounts Explanation Ref. Date 2015 Dec. 31 Dec.31 2016 Mar. 1 May 1 Ref. Debit Value Credit Balance Value Balance Adjusting 16,000 ? Value Value 2016 Mar. 1 Account 2016 May 1 Account Value Value Account May 1 Account Value Value Account (c) 2016 Dec 31 ? ? Value Account (b) (2) Balance Account Value Value Account Value After you have completed the requirements of P8-3B, consider these additional questions. Answers are on the other tab in this file. 1. Suppose the amount uncollectible on March 1 is changed to $2,750 and no cash was received from customer subsequent to the write-off of accounts receivable. What would be the balance of the Allowance for Doubtful Accounts before adjustment? 2. Suppose the balance in the Allowance for Doubtful Accounts before adjustment was $3,100 debit. An aging schedule indicates that total estimated bad debts will be $36,000. What is the year-end adjustment for bad debts