Question
Presented below is information related to the Accounts Receivable accounts of Gulistan Inc during the current year 2014. An aging schedule of the accounts receivable
Presented below is information related to the Accounts Receivable accounts of Gulistan Inc during the current year 2014.
An aging schedule of the accounts receivable as of December 31, 2014, is as follows.
% to be Applied after
Age Net debit balance Correction is made
Under 60 days $ 172,342 1 %
61 - 90 days 136,490 3 %
91 120 days 39,924 6 %
Over 120 days _ 23,644 $ 4,200 definitely uncollectible, estimated
$ 372,400 remainder uncollectible is 25 %
2. The accounts receivable control account has a debit balance of $ 372,400 on December 31, 2014.
3. Two entries were made in the bad debt expense account during the year (a) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (b) a credit for $ 2,740 on November 3, 2014, and a debit to Allowance for Doubtful Accounts because a bankruptcy.
4. The Allowance for Doubtful accounts is as follows for 2014.
_ Allowance for Doubtful Accounts _
Debit Credit
Nov 3, Uncollectible accounts Jan 1, Beginning balance 8,750
Written off 2,740 Dec 31, 5 % of $ 372,400 18,620
5. A credit balance exists in the accounts receivable (61-90 days) of $ 4,840, which represents an advance on a sales contract.
Instructions :
Assuming the books have not been closed for 2014, make the necessary correcting entries
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