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In: Accounting

Question (5) Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December...

Question (5)

Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2016, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:

Estimated Percentage

Uncollectible

Current Accounts $120,000 1%

1–30 days past due 20,000 3%

31–60 days past due 10,000 6%

61–90 days past due 10,000 12%

Over 90 days past due 8,000 30%

Total Accounts Receivable $168,000

Instructions

(a) Prepare the adjusting entry on December 31, 2016, to recognize bad debt expense.

(b) Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year's provision for uncollectible accounts. Prepare the adjusting entry for the current year's provision for uncollectible accounts.

(c) Assume that the company has a policy of providing for bad debts at the rate of 1% of sales, that sales for 2016 were $550,000, and that Allowance for Doubtful Accounts had a $650 credit balance before adjustment. Prepare the adjusting entry for the current year's provision for bad debts.

Answer

Expert Solution

ekkarill92 answered 2 years ago

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