Question

On December 31, 2016, when its Allowance for Doubtful Accounts had a debit balance of $1,432, Sunland Company estimates that 9% of its accounts receivable balance of $105,900 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts. On May 11, 2017, Sunland Company determined that B. Jared’s account was uncollectible and wrote off $1,091. On June 12, 2017, Jared paid the amount previously written off.Required:Prepare the journal entries on December 31, 2016, May 11, 2017, and June 12, 2017.

Answer 1

Answer: Please see explanation column for answers

Explanation:

1) To record bad debts expense

Date                   Account                         Debit              Credit

Dec 31, 2016   Bad Debt Expense      $10,963  

   Allowance for doubtful account                               $10,963

Calculation ;

Bad debts expense

9% x $105,900 = $9,531

Adjustment= $9,531 + debit balance of $1,432=$10,963

2) To write off uncollectible accounts receivables

Date                   Account                                     Debit              Credit

May 11, 2017   Allowance for doubtful account     $1,091.

      Accounts receivable---  B. Jared                                             $1,091.  

3)  To reinstate accounts accounts previously written off

Date                   Account                                             Debit              Credit

June 12, 2017   Accounts receivable---  B. Jared       $1,091.

      Allowance for doubtful account                                                  $1,091.  

3b)to collect cash from receivables

Date                   Account                          Debit              Credit

June 12, 2017  Cash                              $1,091.  

 Accounts receivable---  B. Jared                                 $1,091.