Answer and Explanation:
The journal entries are shown below:
a Bad debt expense $102,500
To Accounts Receivable-Kim Abel $21,550
To Accounts Receivable-Lee Drake $33,925
To Accounts Receivable-Jenny Green $27,565
To Accounts Receivable-Mike Lamb $19,460
(Being the bad debt expense is recorded)
b Allowance for Doubtful accounts $102,500
, To Accounts Receivable-Kim Abel $21,550
To Accounts Receivable-Lee Drake $33,925
To Accounts Receivable-Jenny Green $27,565
To Accounts Receivable-Mike Lamb $19,460
(Being the written- off amount is recorded)
Bad debt expense $117,150
Allowance for Doubtful accounts $117,150
(Being the bad debt expense is recorded)
Working notes:
(in $) (in $)
Days Receivables Balance % Uncollectible Allowance
0-30 days 715000 1% 7150
31-60 days 310000 2% 6200
61-90 days 102000 15% 15300
91-120 days 76000 30% 22800
More
than 120 days 97000 60% 58200
Total 1300000 109650
Now the adjustment balance is
= $109,650 - ($95,000 - $102,500)
= $109,650
