Question

BioWare’s year-end unadjusted trial balance shows accounts receivable of $22,000 and sales of $330,000. Uncollectibles are estimated to be 2% of sales.

Prepare the December 31 year-end adjusting entry for uncollectibles using the percent of sales method.

• Record the estimate of uncollectibles.

	Date General Journal Debit Credit Dec 31

On January 1, Wei Company begins the accounting period with a $46,000 credit balance in Allowance for Doubtful Accounts.

1. On February 1, the company determined that $10,000 in customer accounts was uncollectible; specifically, $2,500 for Oakley Co. and $7,500 for Brookes Co. Prepare the journal entry to write off those two accounts.
2. On June 5, the company unexpectedly received a $2,500 payment on a customer account, Oakley Company, that had previously been written off in part a. Prepare the entries to reinstate the account and record the cash received.

• On February 1, the company determined that $10,000 in customer accounts was uncollectible; specifically, $2,500 for Oakley Co. and $7,500 for Brookes Co. Prepare the journal entry to write off those two accounts.

	Date General Journal Debit Credit Feb 01

• Record the reinstatement of Oakley's account, if necessary.

	Date General Journal Debit Credit Jun 05

• Record the receipt of the amount due from Oakley.

Note: Enter debits before credits.

	Date General Journal Debit Credit Jun 05

Answer 1

1.)		December 31 year-end adjusting entry
	Date	General Journal	Debit $	Credit $
	Dec-31	Bad Debt Expense	6,600
		Allowance for Doubtful Accounts		6,600
		(330,000 x 2% )
2.)	Date	General Journal	Debit $	Credit $
	Feb-01	Allowance for Doubtful Accounts	10,000
		Accounts Receivable- Oakely Co.		2,500
		Accounts Receivable- Brookes Co.		7,500
		( To writte off accounts receivable)
	Jun-05	Accounts Receivable- Oakely Co.	2,500
		Allowance for Doubtful Accounts		2,500
		( To reinstate written off account )
	Jun-05	Cash	2,500
		Accounts Receivable- Oakely Co.		2,500
		( To record receipt of cash )