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In: Accounting

The Accounts Receivable balance for Gold​, Inc. at December​ 31, 2017​, was $27,000. During 2018​, Gold...

The Accounts Receivable balance for Gold​, Inc. at December​ 31, 2017​, was $27,000. During 2018​, Gold earned revenue of 461,000 on account and collected $326,000 on account. Gold wrote off $6,400 receivables as uncollectible. Industry experience suggests that uncollectible accounts will amount to 2​% of accounts receivable.

1. Assume Gold had an unadjusted $1,800 credit balance in Allowance for Bad Debts at December ​31, 2018. Journalize Gold​'s December ​31, 2018​, adjustment to record bad debts expense using the​ percent-of-receivables method.

2.  Assume Gold had an unadjusted $1,500 debit balance in Allowance for Bad Debts at December ​31, 2018. Journalize Gold​'s December ​31, 2018​, adjustment to record bad debts expense using the​ percent-of-receivables method.

Solutions

Expert Solution

  • General Working

Accounts receivables beginning balance

$27,000

Sales on account

$461,000

Cash Collection

($326,000)

Written off

($6,400)

Accounts receivables ending balance

$155,600

  • Requirement 1

Date

Accounts title

Debit

Credit

31-Dec-18

Bad Debt Expense

$1,312

   Allowance for Doubtful accounts

$1,312

>Working

A

Accounts receivables ending balance

$155,600

B = A x 2%

Adjusted balance in Allowance account required

$3,112

Credit

C

Unadjusted balance in Allowance account

$1,800

Credit

D = B - C

Bad Debt Expense

$1,312

  • Requirement 2

Date

Accounts title

Debit

Credit

31-Dec-18

Bad Debt Expense

$4,612

   Allowance for Doubtful accounts

$4,612

>Working

A

Accounts receivables ending balance

$155,600

B = A x 2%

Adjusted balance in Allowance account required

$3,112

Credit

C

Unadjusted balance in Allowance account

$1,500

Debit

D = B + C

Bad Debt Expense

$4,612

ekkarill92 answered 3 months ago
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