Credit Losses Based on Accounts Receivable At December 31, the Hope Company had a balance of $1,247,200 in its Accounts Receivable account and a credit balance of $11,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $1,270,400 in debit balances and $23,200 in credit balances. The company aged its accounts as follows: Current $1,056,000 0-60 days past due 120,000 61-180 days past due 52,800 Over 180 days past due 41,600   $1,270,400 In the past, the company has experienced credit losses as follows: 2% of current balances, 6% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 30% of balances over six months past due. The company bases its allowance for doubtful accounts on an aging analysis of accounts receivable. Required a. Prepare the adjusting entry to record the allowance for doubtful accounts for the year. b. Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet. a. General Journal Date Description Debit Credit Dec.31 Bad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivable         Bad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivabl         To record allowance for credit losses.     b. (Do not use negative signs with your answers.)   Current Assets:       Accounts ReceivableLess: Allowance for Doubtful Accounts         Accounts ReceivableLess: Allowance for Doubtful Accounts                 Current Liabilities:       Customers' Overpayments

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Credit Losses Based on Accounts Receivable At December 31, the Hope Company had a balance of $1,247,200 in its Accounts Receivable account and a credit balance of $11,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $1,270,400 in debit balances and $23,200 in credit balances. The company aged its accounts as follows:

Current $1,056,000
0-60 days past due 120,000
61-180 days past due 52,800
Over 180 days past due 41,600
  $1,270,400


In the past, the company has experienced credit losses as follows: 2% of current balances, 6% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 30% of balances over six months past due. The company bases its allowance for doubtful accounts on an aging analysis of accounts receivable.

Required
a. Prepare the adjusting entry to record the allowance for doubtful accounts for the year.
b. Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.

a.

General Journal
Date Description Debit Credit
Dec.31 Bad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivable
 
 
 
  Bad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivabl
 
 
 
  To record allowance for credit losses.    


b. (Do not use negative signs with your answers.)

  Current Assets:    
  Accounts ReceivableLess: Allowance for Doubtful Accounts
 
 
 
  Accounts ReceivableLess: Allowance for Doubtful Accounts
 
 
 
     
 
  Current Liabilities:    
  Customers' Overpayments    

 

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