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.
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.
Related questions
Jarden Company has credit sales of $2,800,000 for year 2017. On December 31, 2017, the companyâs Allowance for Doubtful Accounts has an unadjusted credit balance of $16,232. Jarden prepares a schedule of its December 31, 2017, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here.
| DECEMBER 31, 2017 Accounts Receivable | âAge of Accounts Receivable | âExpected Percent Uncollectible |
| $560,000 | Not yet due | 0.85% |
| 224,000 | 1 to 30 days past due | 1.60 |
| 44,800 | 31 to 60 days past due | 6.10 |
| 22,400 | 61 to 90 days past due | 30.75 |
| 4,480 | Over 90 days past due | 64.00 |
1. Estimate the required balance of the Allowance for Doubtful Accounts at December 31, 2017, using the aging of accounts receivable method.
| âACCOUNTS RECEIVABLE | âPERCENT UNCOLLECTIBLE (#.##%) | âESTIMATED UNCOLLECTIBLE | ||||
| âNot due: | X | ââ= | ||||
| â1 to 30: | âX | = | ||||
| 31 to 60: | âX | = | ||||
| â61 to 90: | âX | = | ||||
| âOver 90: | X | = |
âESTIMATED BALANCE OF ALLOWANCE FOR UNCOLLECTIBLES: __________ CREDIT OR DEBIT? _________
2. Prepare the adjusting entry to record bad debts expense at December 31, 2017.
Record the estimated bad debts.
| âDATE | âGENERAL JOURNAL | âDEBIT | âCREDIT |
| âDec 31 | |||
