Question

In: Accounting

Sunland Company uses the allowance method to estimate uncollectible accounts receivable. The unadjusted balance in Allowance...

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.)

  

Solutions

Expert Solution

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.)


Related Solutions

Ervin Company uses the allowance method to account for uncollectible accounts receivable
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $5,900,000, and the estimated bad debt percentage is 1.50%. No previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $56,000 at the beginning of 2021 and $47,000, after adjusting entries, at the end of 2021.Required:1. What is bad debt expense for 2021...
Ditzler Company, a construction supply company, uses the allowance method of accounting for uncollectible accounts receivable....
Ditzler Company, a construction supply company, uses the allowance method of accounting for uncollectible accounts receivable. Selected transactions completed by Ditzler company are as follows: Feb 1          Sold merchandise on account to Ames Co., $8000. The cost of the merchandise sold was $4500 Mar. 15      Accepted a 60-day, 12% note for $8000 from Ames Co. on account Apr. 9        Wrote off a $2500 account from Dorset Co. as uncollectible Apr. 21       Loaned $7500 cash to Jill Klein, receiving a 90-day,...
Ditzler Company, a construction supply company, uses the allowance method of accounting for uncollectible accounts receivable....
Ditzler Company, a construction supply company, uses the allowance method of accounting for uncollectible accounts receivable. Selected transactions completed by Ditzler company are as follows: Feb 1          Sold merchandise on account to Ames Co., $8000. The cost of the merchandise sold was $4500 Mar. 15      Accepted a 60-day, 12% note for $8000 from Ames Co. on account Apr. 9        Wrote off a $2500 account from Dorset Co. as uncollectible Apr. 21       Loaned $7500 cash to Jill Klein, receiving a 90-day,...
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is...
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $5,400,000, and the estimated bad debt percentage is 1.50%. No previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $51,000 at the beginning of 2021 and $44,500, after adjusting entries, at the end of 2021. Required: 1. What is bad debt expense for 2021...
Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began...
Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $44,010 and $3,440, respectively. During the year, the company wrote off $2,620 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule: Number of days Receivables % Likely to be past due amount uncollectible Current $ 70,000 1% 0-30 26,700 5% 31-60 6,760 10%...
Ariel Inc. uses the allowance method of accounting for uncollectible accounts receivable and estimates that 2%...
Ariel Inc. uses the allowance method of accounting for uncollectible accounts receivable and estimates that 2% of the credit sales of $1,650,000 for the year ended will be uncollectible. Allowance for Doubtful Accounts has a negative unadjusted balance of $(1,600) at the end of the year. Determine the amount of the adjustment to record the provision for doubtful accounts.
The Dent Sign Company uses the allowance method in accounting for uncollectible accounts. The company uses...
The Dent Sign Company uses the allowance method in accounting for uncollectible accounts. The company uses income statement approach to estimate uncollectible accounts. Past experience indicates that 1% of net credit sales will eventually be uncollectible. Selected account balances at December 31, 2017, and December 31, 2018, appear below: ​12/31/17​​12/31/18​ ​Net Credit Sales​$400,000​$500,000 ​Accounts Receivable​75,000​100,000 ​Allowance for Doubtful Accounts​5,000​? Instructions (a)​Record the following events in 2018. ​Aug.​10​Determined that the account of Ann Koch for $1,000 is uncollectible. ​Sept.​12​Determined that the...
XY merchandising uses the allowance method to account for uncollectible accounts. They have a debit balance...
XY merchandising uses the allowance method to account for uncollectible accounts. They have a debit balance of $150,000 in the account receivable account and a $500 credit balance in the allowance account prior to making an estimate at the end of 2009. they estimate that 2% of the receivable will not be collected. Prepare the adjusting entry XY merchandising should make on 12/31/2018.
Accounts receivable has a balance of $16,000 and the allowance for uncollectible accounts has a credit...
Accounts receivable has a balance of $16,000 and the allowance for uncollectible accounts has a credit balance of $1,600. What is net accounts receivable before and after a $60 account receivable is written off?
Anth Company has significant amounts of trade accounts receivable. Anth uses the allowance method to estimate...
Anth Company has significant amounts of trade accounts receivable. Anth uses the allowance method to estimate bad debts. During the year, some specific accounts were written off as uncollectible, and some that were previously written off as uncollectible were collected. Anth also has some interest-bearing notes receivable for which the face amount plus interest at the prevailing rate of interest is due at maturity. The notes were received on July 1, 2018 and are due on June 30, 2019. Required:...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT