Question

Presented below is information related to the Accounts Receivable accounts of Concord Inc. during the current year 2017.

1. An aging schedule of the accounts receivable as of December 31, 2017, is as follows.

Age		Net Debit Balance			% to Be Applied after Correction Is Made
Under 60 days		$170,300			1%
60–90 days		136,400			3%
91–120 days		38,500	*		5%
Over 120 days		23,000			$3,700 definitely uncollectible; estimated remainder uncollectible is 24%
		$368,200

*The $3,200 write-off of receivables is related to the 91-to-120 day category

2. The Accounts Receivable control account has a debit balance of $368,200 on December 31, 2017.

3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,200 on November 3, 2017, and a debit to Allowance for Doubtful Accounts because of a bankruptcy.

4. Allowance for Doubtful Accounts is as follows for 2017.

Allowance for Doubtful Accounts
Nov. 3		Uncollectible accounts written off		3,200	Jan. 1		Beginning balance		9,300
					Dec. 31		5% of $368,200		18,410

5. A credit balance exists in the Accounts Receivable (60–90 days) of $4,700, which represents an advance on a sales contract.

Assuming that the books have not been closed for 2017, make the necessary correcting entries.

Answer 1

Necessary correcting entries are as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
Dec-31	Bad Debt Expense		3,200
	Account Receivable			3,200
	(for correct bad debt expense and write off account receivable)
Dec-31	Account Receivable		4,700
	Advance on Sales contract			4,700
	(For reclassify credit balance in account receivable)
Dec-31	Allowance for doubtful accounts		3,700
	Account Receivable			3,700
	(For write off account receivable)
Dec-31	Allowance for doubtful accounts		11,270
	Bad debt expense			11,270
	(for allowance reduced)

Working:

		% to Be Applied after
Age	Net Debit Balance	Correction Is Made
Under 60 days	$ 170,300	1%	$ 1,703
60–90 days	$ 136,400	3%	$ 4,092
91–120 days	$ 38,500	5%	$ 1,925
Over 120 days	$ 23,000	$3,700 definitely uncollectible;	$ 5,520
		estimated remainder uncollectible is 24%
	$ 368,200		$ 13,240
		Closing balance	$ 24,510
			$ 11,270