Erickson Company had a $300 credit balance in Allowance forDoubtful Accounts at December 31, 2017, before the current year'sprovision for uncollectible accounts. An aging of the accountsreceivable revealed the following:
EstimatedPercentage
Uncollectible
CurrentAccounts $170,000 1%
1â30 dayspastdue 15,000 3%
31â60 dayspastdue 12,000 6%
61â90 dayspastdue 5,000 15%
Over 90days pastdue 9,000 30%
TotalAccountsReceivable $211,000
Instructions
(a) Prepare the adjusting entry on December 31,2017, to recognize bad debts expense.
(b) Assume the same facts as above except that theAllowance for Doubtful Accounts account had a $300 debit balancebefore the current year's provision for uncollectible accounts.Prepare the adjusting entry for the current year's provision foruncollectible accounts.
Erickson Company had a $300 credit balance in Allowance forDoubtful Accounts at December 31, 2017, before the current year'sprovision for uncollectible accounts. An aging of the accountsreceivable revealed the following:
EstimatedPercentage
Uncollectible
CurrentAccounts $170,000 1%
1â30 dayspastdue 15,000 3%
31â60 dayspastdue 12,000 6%
61â90 dayspastdue 5,000 15%
Over 90days pastdue 9,000 30%
TotalAccountsReceivable $211,000
Instructions
(a) Prepare the adjusting entry on December 31,2017, to recognize bad debts expense.
(b) Assume the same facts as above except that theAllowance for Doubtful Accounts account had a $300 debit balancebefore the current year's provision for uncollectible accounts.Prepare the adjusting entry for the current year's provision foruncollectible accounts.
Related questions
Kiley Company had a $900 credit balance in Allowance for Doubtful Accounts at December 31, 2005, 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 | 12,000 | 3% |
| 31-60 days past due | 10,000 | 6% |
| 61-90 days past due | 5,000 | 12% |
| Over 90 days past due | 8,000 | 30% |
| Total Accounts Receivable | $155,000 | |
Instructions
Please identify each of your answers with the letter of the transactions you are journalizing.
(a)Prepare the adjusting entry on December 31, 2005, to recognize bad debts expense.
(b)Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $700 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 2005 were $500,000, and that Allowance for Doubtful Accounts had a $550 credit balance before adjustment. Prepare the adjusting entry for the current year's provision for bad debts.
