Question

The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2019:

Number of Days Unpaid	Total Accounts Receivable			Historical % Uncollectible
Not yet due	$	126,900			2	%
1-30 days past due		89,600			12	%
31-60 days past due		54,000			18	%
Over 60 days past due		32,200			33	%

Required:

1. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,067 on July 31, 2019. Prepare the required adjusting entry to record Bad Debt Expense for the year.
2. Johnston Supplies, Inc. writes off $3,121 of uncollectible accounts on August 15, 2019. Prepare the required adjusting entry to record the write-off.
3. Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15, 2019.

Complete this question by entering your answers in the tabs below.

• Required A
• Required B
• Required C

The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,067 on July 31, 2019. Prepare the required adjusting entry to record Bad Debt Expense for the year.

Journal entry worksheet

• Record the adjusting entry to record bad debt expense for the year July 31, 2019.

Note: Enter debits before credits.

	Date General Journal Debit Credit July 31, 2019

• Required A
• required b and C

Answer 1

ANSWER

Computation of estimated uncollectibles - Johnston Supplies Inc.
Number of days unpaid	Total Accounts receivable	Hostorical % uncollectible	Estimated Uncollectible
Not yet due	$126,900	2%	$2,538
1-30 days past due	$89,600	12%	$10,752
31-60 days Past Due	$54,000	18%	$9,720
Over 60 days past due	$32,200	33%	$10,626
Total	$302,700		$33,636

Adjusting Journal Entries
Date	Particulars	Debit	Credit
31-Jul-16	Bad debts expense Dr ($33,636-$29,067 )	$4,569
	To Allowance for doubtful accounts		$4,569
	(To record bad debt expense for the year)

Solution b:

Adjusting Journal Entries (To record Write off)
Date	Particulars	Debit	Credit
15-Aug-16	Allowance for doubtful accounts	$3,121
	To Accounts receivable		$3,121
	(To record write-off of uncollectible accounts)

Solution c:

Allowance for Doubtful Accounts
			31-Jul-16	Unadjusted Balance	$29,067
15-Aug-16	Accounts Receivable	$3,121	31-Jul-16	Bad debt expense	$4,569
15-Aug-16	Ending Balance	$30,515
Total		$33,636			$33,636

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