Recording Entries to Estimate Bad Debt Expense Including the Write-Off and Subsequent Collection of an Account Following are accounts of Long Company at its December 31 year-end for the current year. $25,500 Accounts receivable balance, December 31, prior year Allowance for doubtful accounts balance, December 31, prior year Total sales revenue during the current year (1/6 are on credit) Uncollectible account written off during the current year (A. Smith) Cash collected on accounts receivable during the current year 1,500 480,000 500 85,000 Required Recording Write-off b. Prepare the entry to record bad debt expense for each of the following three cases. • Note: Treat each case separately. 1. Bad debt losses assume 1% of credit sales. Date Dec. 31 Bad Debt Expense Recording Bad Debt Expense Date Dec. 31 Account Name Allowance for Doubtful Accounts To record bad debt Age Less than 30 days 31-90 days 91-120 days More than 120 days Account Name Bad Debt Expense Allowance for Doubtful Accounts To record bad debt Dr. 2. Bad debt losses assume 8% of the ending balance of accounts receivable. Financial Statement Presentation Dr. 800 0 3. Bad debt losses assuming the following aging schedule. 0 0 Accounts Receivable Probability of Noncollection $14,000 3,500 1,500 1,000 Cr. Cr. 296 1096 3096 60%6 0 800 0x 0x Recording Recovery Analysis
Recording Entries to Estimate Bad Debt Expense Including the Write-Off and Subsequent Collection of an Account Following are accounts of Long Company at its December 31 year-end for the current year. $25,500 Accounts receivable balance, December 31, prior year Allowance for doubtful accounts balance, December 31, prior year Total sales revenue during the current year (1/6 are on credit) Uncollectible account written off during the current year (A. Smith) Cash collected on accounts receivable during the current year 1,500 480,000 500 85,000 Required Recording Write-off b. Prepare the entry to record bad debt expense for each of the following three cases. • Note: Treat each case separately. 1. Bad debt losses assume 1% of credit sales. Date Dec. 31 Bad Debt Expense Recording Bad Debt Expense Date Dec. 31 Account Name Allowance for Doubtful Accounts To record bad debt Age Less than 30 days 31-90 days 91-120 days More than 120 days Account Name Bad Debt Expense Allowance for Doubtful Accounts To record bad debt Dr. 2. Bad debt losses assume 8% of the ending balance of accounts receivable. Financial Statement Presentation Dr. 800 0 3. Bad debt losses assuming the following aging schedule. 0 0 Accounts Receivable Probability of Noncollection $14,000 3,500 1,500 1,000 Cr. Cr. 296 1096 3096 60%6 0 800 0x 0x Recording Recovery Analysis
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:Recording Entries to Estimate Bad Debt Expense Including the Write-Off and Subsequent Collection of an Account
Following are accounts of Long Company at its December 31 year-end for the current year.
$25,500
Accounts receivable balance, December 31, prior year
Allowance for doubtful accounts balance, December 31, prior year
Total sales revenue during the current year (1/6 are on credit)
Uncollectible account written off during the current year (A. Smith)
Cash collected on accounts receivable during the current year
1,500
480,000
500
85,000
Required
Recording Write-off
b. Prepare the entry to record bad debt expense for each of the following three cases.
• Note: Treat each case separately.
1. Bad debt losses assume 1% of credit sales.
Date
Dec. 31
Bad Debt Expense
Allowance for Doubtful Accounts
To record bad debt
Recording Bad Debt Expense
Account Name
Date
Dec. 31 Bad Debt Expense
Age
Less than 30 days
31-90 days
Account Name
Allowance for Doubtful Accounts
To record bad debt
91-120 days
More than 120 days
2. Bad debt losses assume 8% of the ending balance of accounts receivable.
Dr.
3. Bad debt losses assuming the following aging schedule.
Date
Dec. 31 Bad Debt Expense
Account Name
Dr.
Accounts Receivable
To record bad debt
800
0
Accounts Receivable Probability of Noncollection
$14,000
3,500
1,500
1,000
0
0
Dr.
Financial Statement Presentation
0
0
296
10%
Cr.
30%
60%
Cr.
0
800✔
Cr.
0x
0x
0x
0x
Recording Recovery Analysis
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