Question

Question:

Question:Corp. made $1,500,000 in sales during 2017. Twenty percent of these were cash sales. During the year, $72,000 of accounts receivable were written off as being uncollectible. In addition, $40,000 of the accounts that were written off in 2016, were unexpectedly collected in 2017. At its' year-end December 31, 2017, Diebold had a balance of $525,000 in accounts receivable. The balance in the Allowance for Doubtful Accounts general ledger account was $112,500 credit at December 31, 2017.

Table:

Age (days) A/R

1-30 $210,000

31-60 $105,000

61-90 $52,500

91-120 $126,000

Over 120 $31,500

Total $525,000

Questions:

Prepare journal entries to record the following 2017 transactions:

The write-off of $72,000

The recovery of $40,000

Recalculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2017.

The estimated uncollectible accounts at December 31, 2017 are calculated as follows:

Table:

Age (days) Estimated Loss Percentage

1-30 2%

31-60 4%

61-90 6%

91-120 10%

Over 120 40%

Question: Prepare the adjusting entry required at December 31, 2017.

Answer 1

	Journal entries
1	Allowance for doubtful accounts	72000
	Accounts receivable		72000
2	Accounts receivable	40000
	Allowance for doubtful accounts		40000
	Cash	40000
	Accounts receivable		40000
	Allowance for doubtful accounts	Debit	Credit
	Beginning balance		112500
	Write off	72000
	Recovered		40000
	Total	72000	152500
	Balance		80500
		Accounts receivable	% uncollectible	Uncollectible amount
	1-30 days	210000	2%	4200
	31-60 days	105000	4%	4200
	61- 90 days	52500	6%	3150
	90-120 days	126000	10%	12600
	Over 120 days	31500	40%	12600
	Total	525000		36750
	Estimated balance of allowance for uncollectible	36750
Less	Beginnning uncollectible balance	112500
	Bad debt expense	75750
	Allowance for doubtful accounts	75750
	Bad debt expense		75750