Question

Bryson Company has accounts receivable of $125,000 at October 31, 2020, and uses the allowance method...

Bryson Company has accounts receivable of $125,000 at October 31, 2020, and uses the allowance method to account for uncollectible receivables. Based on experience, it estimates that 8% of its receivables will be uncollectible.

(a) What journal entry would Bryson make to record the estimated uncollectible amount assuming the company already has an existing $1,500 debit balance in its Allowance account?

(b) What journal entry would Bryson make to record the write-off of a $750 receivable?

(c) What journal entries would be made if the customer whose receivable was written off in (b) later paid Bryson the $750?

(d) How would the journal entry in (b) differ if Bryson used the direct write-off method rather than the allowance method?

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Answer #1

A.

No General Journal Debit Credit
A Bad debts expense 11,500
Allowance for Doubtful Accounts 11,500
(125,000*8%)+1,500

B.

No General Journal Debit Credit
B Allowance for Doubtful Accounts 750
Accounts Receivable 750

C.

No General Journal Debit Credit
1 Accounts Receivable 750
Allowance for Doubtful Accounts 750
2 Cash 750
Accounts Receivable 750

D.

No General Journal Debit Credit
D Bad debts expense 750
Accounts Receivable 750
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