Question

An aging analysis of Yamoto Limited’s accounts receivable at December 31, 2018 and 2017, showed the following:

Number of Days Outstanding	Accounts Receivable		Estimated Percentage Uncollectible
	2018	2017
0-30 days	$300,000	$320,000	3%
31-61 days	64,000	114,000	6%
61-90 days	86,000	76,000	12%
Over 90 days	130,000	50,000	24%
Total	$580,000	$560,000

Additional information:

1. At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts was a credit of $9,000.

2. In 2018, $42,000 of accounts were written off as uncollectible and $3,000 of accounts previously written off were recovered.

Required:

a. Prepare an aging schedule to calculate the estimated uncollectible accounts at December 31, 2017 and 2018. Note that the estimated percentage uncollectible are the same for both years.

b. Record the adjusting entry relating to bad debts on December 31,2017.

c. Record the write off of uncollectible accounts in 2018.

d. Record the collection of accounts previously written off in 2018.

e. Prepare the adjusting entry relating to bad debts on December 31, 2018.

f. Calculate the carrying amount (net realizable value) of Yamoto’s accounts receivable at December 31, 2017 and 2018.

Answer 1

Requirement a
	Aging schedule for calculation of estimated uncollectible accounts
	No of days	Accounts Receivable in $		Estimated percentage Uncollectible	Estimated Uncollectible accounts
		2018	2017		2018	2017
	0-30 days	300000	320000	3%	9000	9600
	31-61 days	64000	114000	6%	3840	6840
	61-90 days	86000	76000	12%	10320	9120
	Over 90 days	130000	50000	24%	31200	12000
	Total	580000	560000		54360	37560
Requirement b
						Amount in $
	Date	General Journal				Debit	Credit
	December 31, 2017	Bad-debts expense				37560
			Allowance for Doubtful accounts				37560
		To record the bad -debts expense for the year
Requirement c
	December 31, 2018	Allowance for Doubtful accounts				42000
			Accounts receivable				42000
		To record the written off as uncollectible
Requirement d
	December 31, 2018	Cash				3000
			Accounts receivable				3000
		Accounts receivable				3000
			Allowance for Doubtful accounts				3000
		To record the collection of accounts previous written off
Requirement e
	December 31, 2018	Bad-debts expense				54360
			Allowance for Doubtful accounts				54360
		To record the bad -debts expense for the year
Requirement f
	Calculation of carrying amount of accounts receivable					2018	2017
	Gross amount of Accounts receivable					580000	560000
	Less : Allowance for doubt debts					61920	46560
	Carrying amount of accounts receivable					518080	513440