PROBLEM 1

Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2020, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:

Estimated Percentage

Uncollectible

Current Accounts $120,000 1%

130 days past due 20,000 3%

3160 days past due 10,000 6%

6190 days past due 10,000 12%

Over 90 days past due 8,000 30%

Total Accounts Receivable $168,000

Instructions

(a) Prepare, in good form, the adjusting journal entry on December 31, 2020, to recognize bad debt expense.

(b) Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year's provision for uncollectible accounts. Prepare, in good form, the adjusting journal entry for the current year's provision for uncollectible accounts.