In: Accounting
Sunland Company uses the allowance method to estimate uncollectible accounts receivable. The unadjusted balance in Allowance for Doubtful Accounts is a debit of $5,000.
The company produced the following information from aging its
accounts receivable at year end. Complete the aging schedule and
calculate the total estimated uncollectible accounts.
Number of Days Outstanding | ||||||||||
Total | 0–30 | 31–60 | 61–90 | 91–120 | ||||||
Accounts receivable | $580,000 | $330,000 | $120,000 | $80,000 | $50,000 | |||||
Estimated % uncollectible | 2% | 6% | 10% | 30% | ||||||
Estimated uncollectible accounts | $ | $ | $ | $ | $ |
Record the bad debt adjusting entry using the information determined in part (a).
Account Titles and Explanation |
Debit |
Credit |
(To record estimate of uncollectible accounts.) |
In the following year, $22,000 of the outstanding accounts
receivable is determined to be uncollectible. Record the write off
of the uncollectible accounts.
Account Titles and Explanation |
Debit |
Credit |
(To record writeoff of accounts receivable.) |
The company collects $3,500 of the $22,000 of accounts that was
determined to be uncollectible in part (c). The company also
expects to collect an additional $1,000. Record the journal entry
(or entries) to restore the accounts receivable and the cash
collected. Collection of the $1,000 is expected in the near
future.
Account Titles and Explanation |
Debit |
Credit |
(To reverse write off.) |
||
(To record collection of previously written off account.) |
Complete the aging schedule and calculate the total estimated uncollectible accounts.
Number of Days Outstanding | ||||||||||
Total | 0–30 | 31–60 | 61–90 | 91–120 | ||||||
Accounts receivable | $580,000 | $330,000 | $120,000 | $80,000 | $50,000 | |||||
Estimated % uncollectible | 2% | 6% | 10% | 30% | ||||||
Estimated uncollectible accounts | $36800 | $6600 | $7200 | $8000 | $15000 |
Record the bad debt adjusting entry using the information determined in part (a).
Account Titles and Explanation |
Debit |
Credit |
Bad debt expense (36800+5000) | 41800 | |
Allowance for doubtful accounts | 41800 | |
(To record estimate of uncollectible accounts.) |
In the following year, $22,000 of the outstanding accounts receivable is determined to be uncollectible. Record the write off of the uncollectible accounts.
Account Titles and Explanation |
Debit |
Credit |
Allowance for doubtful accounts | 22000 | |
Account receivable | 22000 | |
(To record writeoff of accounts receivable.) |
The company collects $3,500 of the $22,000 of accounts that was
determined to be uncollectible in part (c). The company also
expects to collect an additional $1,000. Record the journal entry
(or entries) to restore the accounts receivable and the cash
collected. Collection of the $1,000 is expected in the near
future.
Account Titles and Explanation |
Debit |
Credit |
Account receivable | 4500 | |
Allowance for doubtful accounts | 4500 | |
(To reverse write off.) |
||
Cash | 3500 | |
Account receivable | 3500 | |
(To record collection of previously written off account.) |