Question
Your company has $3,400,000 in credit sales during 2011. The beginning balance of the allowance for doubtful accounts is $3,000 and the company writes off
Your company has $3,400,000 in credit sales during 2011. The beginning balance of the allowance for doubtful accounts is $3,000 and the company writes off $800 in bad debts during the year.
(a) | Calculate the estimated doubtful accounts using the aging of accounts receivable method given that $1,640,000 of the credit sales are not yet due (estimated that 0.4% are uncollectible), $351,000 are 1-60 days late (estimated that 3.20% are uncollectible) and $20,000 are over 60 days late (estimated that 31% are uncollectible). (Omit the "$" sign in your response.) |
Estimated doubtful accounts | $ |
(b) | Using the assumptions in the initial problem statement above, and using the aging of accounts method, calculate the bad debt expense. Show your calculation in a T-account for Allowance for doubtful accounts and present the journal entry to record bad debt expense. (Omit the "$" sign in your response.) |
Allowance for doubtful accounts |
Write-offs | Beginning balance | |||
Bad debt expense | ||||
Ending balance | ||||
General Journal | Debit | Credit |
(Click to select)Accounts payableInterest revenueCashAllowance for doubtful accountsAccounts receivableBad debt expenseInterest receivableNotes receivable | ||
(Click to select)Allowance for doubtful accountsNotes receivableBad debt expenseInterest receivableAccounts receivableInterest revenueAccounts payableCash | ||
(c) | Calculate the estimated bad debt expense using the percentage of credit sales method and prepare the journal entry. Historically your company is unable to collect 1.60% of credit sales. (Omit the "$" sign in your response.) |
Estimated bad debt expense | $ |
General Journal | Debit | Credit |
(Click to select)Interest revenueNotes receivableCashInterest receivableBad debt expenseAccounts receivableAccounts payableAllowance for doubtful accounts | ||
(Click to select)Accounts receivableInterest receivableAccounts payableAllowance for doubtful accountsBad debt expenseNotes receivableInterest revenueCash |
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