P8-1B The following represents selected information taken from a company's aging related to bad debts. schedule to estimate uncollectible accounts receivable at year-end. (LO 2, 3), AP hapter 8 Reporting and Analyzing Receivables Number of Days Outstanding 91-120 Over 120 Total 0-30 31-60 61-90 Accounts receivable $305,000 $107,000 | $60,000 $50,000 $38,000 $50,000 % uncollectible 2% 5% 7.5% 10% 25% Estimated bad debts Instructions (a) Calculate the total estimated bad debts based on the above information. (b) Prepare the year-end adjusting journal entry to record the bad debts using the allowance method and the aged uncollectible accounts receivable determined in (a). Assume the unadjusted balance in Allowance for Doubtful Accounts is a $7,000 credit. (c) Of the above accounts, $2,600 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts. (d) The company subsequently collects $1,200 on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection. bad debts $25,190
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images