In: Accounting
Buffalo Industries uses the allowance method of accounting for bad debts. The company produced the following aging of the accounts receivable at year-end.
1.Calculate the total estimated bad debts based on the information below.
# of days outstanding | total | 0-30 | 31-60 | 61-90 | 91-120 | over 120 |
Accounts receivable | $ 422,000 | 259,000 | 82,000 | 44,000 | 24,000 | 13,000 |
% uncollectible | 1% | 4% | 5% | 8% | 11% | |
Estimated debt |
2.Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined above. Assume the unadjusted balance in Allowance for Doubtful Accounts is a $3,900 debit.
3.Of the above accounts, $4,700 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
4.The company collects $4,700 subsequently on a specific account that had previously been determined to be uncollectible in part (c). Prepare the journal entries necessary to (1) restore the account and (2) record the cash collection.