Respuesta :
Answer:
- 1. One entry to summarize all accounts written off against the
Allowance for Doubtful Accounts during 2015.
Dr Allowance for Uncollectible Accounts $ 160.000
Cr Accounts Receivable $ 160.000
- 2. Entries to record the $18,000 in accounts receivable that were subsequently collected.
Dr Accounts Receivable $ 18.000
Cr Allowance for Uncollectible Accounts $ 18.000
Dr CASH $ 18.000
Cr Accounts Receivable $ 18.000
3. The adjusting entry required at December 31, 2015, to increase the Allowance for Doubtful Accounts to $222,000.
Dr Bad Debt Expense $ 284.000
Cr Allowance for Uncollectible Accounts $ 284.000
Explanation:
- Initial Balance
Dr Accounts Receivable $ 3.100.000
Cr Allowance for Uncollectible Accounts $ 80.000
- During 2015, $160,000 of specific accounts receivable were written off as uncollectible
Dr Allowance for Uncollectible Accounts $ 160.000
Cr Accounts Receivable $ 160.000
- Of these accounts written off, receivables totaling $18,000 were subsequently collected.
Dr Accounts Receivable $ 18.000
Cr Allowance for Uncollectible Accounts $ 18.000
- Of these accounts written off, receivables totaling $18,000 were subsequently collected.
Dr CASH $ 18.000
Cr Accounts Receivable $ 18.000
- 1. One entry to summarize all accounts written off against the
Allowance for Doubtful Accounts during 2015.
Dr Allowance for Uncollectible Accounts $ 160.000
Cr Accounts Receivable $ 160.000
- 2. Entries to record the $18,000 in accounts receivable that were subsequently collected.
Dr Accounts Receivable $ 18.000
Cr Allowance for Uncollectible Accounts $ 18.000
Dr CASH $ 18.000
Cr Accounts Receivable $ 18.000
- 3. The adjusting entry required at December 31, 2015, to increase the Allowance for Doubtful Accounts to $222,000.
Dr Bad Debt Expense $ 284.000
Cr Allowance for Uncollectible Accounts $ 284.000
If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of accounts receivables as CREDIT.
Because the company has a debit balance in that account it's necessary to register an entry that compensate the DEBIT value and reflect A CREDIT estimated as % of account receivable.
- Final Balance 2015
Dr Accounts Receivable $ 2.940.000
Dr Allowance for Uncollectible Accounts $ 222.000
Bad accounts are those credits granted by the company and there is no possibility of being charged.
"When customers buy products on credits but the company cannot collect the debt, then it's necessary
to cancel the unpaid invoice as uncollectible."
One way is to directly cancel bad debts at the time it was decided that the credit is bad, the total amount reported as bad debt expenses negatively affect the income statement and the accounts receivable are reduced by the same amount, less assets
The other way is to determine a percentage of the total amount of accounts receivable as bad debts, there are many ways to analyze accounts receivable and calculate the value of bad debts.
When the company has the percentage of uncollectible accounts, the required journal entry is Bad Expenses (debit) with Reserve for Bad Accounts (credit)
At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit) with accounts receivable (credit), with this we are recognizing the bad credit of the company.
