Question

In: Accounting

Jill’s Jumpers has a Balance in Accounts Receivable of $42,000 and a Debit Balance in the...

  1. Jill’s Jumpers has a Balance in Accounts Receivable of $42,000 and a Debit Balance in the Allowance for Doubtful Accounts of $2,200 on Dec 31, 2014. Sales on Account for 2014 were $125,000. Jill estimates that 10% of the Sales on Account will not be paid.

Required:

  1. Record the entry for Bad Debt Expense for Dec 31, 2014

$125,000 x .10 = $12,500                               Dr.                   Cr.

Bad Debt Expense                                          $12,500

            Allowance for Bad Debt                                             $12,500

  1. What is the ending Balance in the Allowance for Uncollectible Accounts on Dec 31, 2014?

12,500 – 2,200 = $10,300

  1. What is the realizable value on Dec 31, 2014?

125,000 – 10,300 = $114,700

Solutions

Expert Solution

Working Notes:
Allowance for Doubtfull Debts (Opening Bal.) $                     2,200 Debit
Add: Provision for the Allowance of Bad debts of the year= $                  12,500 Credit
Balance need to be provission for the year $                  14,700 Credit
So we can show the bad debts expenses for the year = $                  14,700
Date Particulars Debit Credit
a) Bad Debts Expenses account $14,700
       To Allowance for Doubtful Accounts $14,700
b) Ending balance in allowance for doubtfull debts
Allowance for the year = $                  14,700
Less: Opening Balance (Debit) $                     2,200
Ending Balance $                  12,500
c) Realize Value of Dec 31,2014 = $125,000 - $ 12,500 = $               1,12,500

ekkarill92 answered 2 years ago
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