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oksian1 [2.3K]
3 years ago
14

Eastman Company had a $400 credit balance in Allowance for Doubtful Accounts at December 31, 2012, before the current year's pro

vision for uncollectible accounts. An aging of the accounts receivable revealed the following:_________.
Estimated Percentage uncollectible
Current Accounts $170,000 1%
1-30 days past due 15,000 3%
31-60 days past due 12,000 6%
61-90 days past due 5,000 12%
Over 90 days past due 9,000 30%
Total Accounts Receivable $211,000
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 $400 debit balance before the current year's provision for uncollectible accounts. Prepare the adjusting entry for the current year's provision for uncollectible accounts.
Business
1 answer:
Reptile [31]3 years ago
8 0

Answer: Please see explanation column

Explanation:

Uncollectible amount = Amount x percentage of the uncollectible  amount

$170,000 x 1% ) + (15,000 x 3% ) + ( 12,000 x 6% ) + (5,000 x  12% ) + (9,000 x 30%) = 1700+450+720+600+2700= $6,170

Credit Balance from Eastman =  $400

Adjustment required = $6170 - $400 (credit) = $5,770

Journal to record adjusting entry on December 31, 2012 for recognized bad debts expense.

a) Accounts Titles & Explanation    Debit                 Credit

Bad Debt Expense                  $5, 770  

Allowance for Doubtful Accounts                     $5,770

b Allowance for Doubtful Accounts account=  $400 debit balance before the current year's provision for uncollectible accounts.

Adjustment required = $6170 +$400 (debit) = $6,570

Accounts Titles & Explanation Debit                     Credit

Bad Debt Expense                 $6,570  

Allowance for Doubtful Accounts               $6,570

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