Writing Off Bad Debts

Type in the DEBIT ACCOUNT with AMOUNT and CREDIT ACCOUNT with AMOUNT

A) Chainz Co. uses the Allowance Method to account for uncollectible accounts. Past experience indicates that 5.5% of Accounts Receivable will be uncollectible.

- Allowance for Doubtful Accounts has a $9,500 credit balance.

- Accounts Receivable for the year ended December 31, 2021, was $5,680,000.

12/31/21 - Prepare the adjusting entry at the end of the year to record estimated bad debt.

B) The company's Accounts Receivable include a $7,750 balance due from S. Shortcake. The company uses an Accounts Receivable subsidiary ledger.

On 3/15/2022 the account of S. Shortcake was deemed to be uncollectible and should be written off.

Prepare the appropriate journal entry to show this write-off.

C) S. Shortcake received an inheritance on 7/31/22 and brings $7,750 cash to Chainz Co. for the amount previously owed.

Prepare the entry(ies) to appropriately record the cash.

D) At year-end Yeti Supplies, has the following account balances:

- Accounts Receivable: $450,000

- Allowance for Doubtful Accounts: $2,275 debit balance (before any adjustment)

It is estimated that bad debts will be 6.25% of Accounts Receivable. Prepare the adjusting entry at the end of the year to record the estimated bad debt.

E) Show the Allowance for Doubtful Accounts T-account for the Yeti Company with all the entries and ending balances for the year.