Question

Problem 8-3A

Presented below is an aging schedule for Concord Corporation.

						Number of Days Past Due
Customer		Total		Not Yet Due		1–30		31–60		61–90		Over 90
Anders		$ 24,900				$11,200		$13,700
Blake		38,600		$ 38,600
Coulson		58,500		16,800		5,800				$35,900
Deleon		33,300										$33,300
Others		131,200		97,100		15,200		13,300				5,600
		$286,500		$152,500		$32,200		$27,000		$35,900		$38,900
Estimated Percentage Uncollectible				3%		5%		12%		27%		43%
Total Estimated Bad Debts		$ 35,845		$ 4,575		$ 1,610		$ 3,240		$ 9,693		$16,727

At December 31, 2019, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $13,000.

a. Journalize the adjusting entry for bad debts at December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

b. Post the adjusting entry for bad debts at December 31, 2019.

c. Journalize the following events and transactions in the year 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(1)		On March 31, a $1,200 customer balance originating in 2019 is judged uncollectible.
(2)		On May 31, a check for $1,200 is received from the customer whose account was written off as uncollectible on March 31.

d. Post to the allowance account the events and transactions in the year 2020.

e. Journalize the adjusting entry for bad debts on December 31, 2020, assuming that the unadjusted balance in Allowance for Doubtful Accounts is a debit of $880 and the aging schedule indicates that total estimated bad debts will be $32,700. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

a) Adjusting entry

Date	account and explanation	Debit	Credit
Dec 31	bad debt expense (35845-13000)	22845
	Allowance for doubtful accounts		22845
	(To record adjusting entry)

b) T account

Bad debt expense					Allowance for doubtful accounts
Dec 31	22845						Beg Bal	13000
							Dec 31	22845
							End bal	35845

c) Journal entry

Date	Account and explanation	Debit	Credit
Mar 31	Allowance for doubtful accounts	1200
	Account receivable		1200
May 31	Account receivable	1200
	Allowance for doubtful accounts		1200
	Bank	1200
	Account receivable		1200

d) Allowance account

Account receivable	1200	Beg Bal	35845
		Account receivable	1200

e) Journal entry

Date	account and explanation	Debit	Credit
Dec 31	bad debt expense (32700+880)	33580
	Allowance for doubtful accounts		33580
	(To record adjusting entry)