Question

Assume the year end for Oblix Company is December 31. Selected transactions of fiscal year 2018 for Oblix Company are presented below. All accounts are in normal balance:

1. Beginning balance account receivable, $8,162; beginning balance allowance for doubtful accounts, $272.
2. Service revenue all on account, $75,906.
3. Collections on account, $74,628.
4. Write-offs of uncollectible accounts receivable, $200.
5. Recovered an account receivable that had been previously been written off, $100.
6. Aging schedule of accounts receivable at year-end:

Days Outstanding	Outstanding Amount	% Estimated to be Uncollectible
Within 60 days	$6,000	1%
Within 90 days	$2,000	4%
> 90 days	$1,240	10%

Required:

1. Prepare the journal entry to write off uncollectible account receivable in 2018.

1. Prepare the journal entry to record recovery of uncollectible accounts receivable in 2018.

1. Prepare the journal entry of 2018 bad debt expenses.

I'd like to know how to solve 3 questions.

Answer 1

1.when the uncollectible account is written off acounts receivable will reduce by crediting it and allowance for doubtful account will reduce by debiting it.

No.	Account	Debit	Credit
1	Allowance for doubtful account	$200
	Accounts receiavble		$200

2. When accounts written off is recovered back two journal enteries will be required , first will be exactly revered to (1) above

No.	Account	Debit	Credit
2	Accounts receivable	$100
	Allowance for doubtful account		$100
	Cash	$100
	Accounts receivable		$100

3.

Days Outstanding	Outstanding Amount	% Estimated to be Uncollectible	Bad debts
Within 60 days	$6,000	1%	$60[6,000*1%]
Within 90 days	$2,000	4%	$80[2,000*4%]
> 90 days	$1,240	10%	$124
		Total	$264

Allowance for doubtful account

beginning balance+bad debts expense for current year - Bad debts for current year + bad debts recovered = Ending allowance for doubtful accoumt

$272+Bad debts - $200+$100 =$264

Bad debts = $264-$272+$200-$100

=$92

	Account	debit	Credit
3	Bad debts expense	$92
	Allowance for doubtful account		$92

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