Minquo Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2012, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible 1% 3% 6% 12% 30% Current Accounts 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due Total Accounts Receivable $120,000 20,000 10,000 10,000 8,000 $168,000 Instructions (a) Prepare the adjusting entry on December 31, 2012, to recognize bad debts 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 2012 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.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Section 2: Problem
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 8 images
Regarding Step4, I have some conservation..
Dr
Cr Allowance for doubtful Debt is 5,500
=>> the allowance is 5,500+650= 6,150
Please review the above solution and correct me if I'm not right .
by Bartleby ExpertMinquo Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2012, before the current year's provision for uncollectible accounts.
why we didnt consider $700 in our caculation?
by Bartleby Expert
