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Aging Method On January 1, 2019, Smith, Inc., has the following balances for accounts receivable and...

Aging Method

On January 1, 2019, Smith, Inc., has the following balances for accounts receivable and allowance for doubtful accounts:

Accounts Receivable $381,000
Allowance for Doubtful Accounts (a credit balance) 3,900

During 2019, Smith had $2,850,000 of credit sales, collected $2,905,000 of accounts receivable, and wrote off $3,850 of accounts receivable as uncollectible. At year end, Smith performs an aging of its accounts receivable balance and estimates that $3,800 will be uncollectible.

Required:

1.  Calculate Smith's preadjustment balance in accounts receivable on December 31, 2019.
$

2.  Calculate Smith's preadjustment balance in allowance for doubtful accounts on December 31, 2019.
$

3.  Prepare the necessary adjusting entry for 2019.

Bad Debt Expense
Allowance for Doubtful Accounts
Record adjusting entry for bad debt expense estimate
Business   Accounting   
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Homework Answers

Answer #1

1.  Calculate Smith's preadjustment balance in accounts receivable on December 31, 2019

Account receivable = (381000+2850000-2905000-3850) = 322150

2.  Calculate Smith's preadjustment balance in allowance for doubtful accounts on December 31, 2019

Allowance for doubtful accounts = 3900-3850 = 50

3) Adjusting entry :

Date accounts & explanation debit credit
Bad Debt Expense (3800-50) 3750
    Allowance for Doubtful Accounts 3750
(Record adjusting entry for bad debt expense estimate)
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