Question

Sheridan Company uses the allowance method to estimate uncollectible accounts receivable. The unadjusted balance in Allowance for Doubtful Accounts is a debit of $7,000.

The company produced the following information from aging its accounts receivable at year end. Complete the aging schedule and calculate the total estimated uncollectible accounts. (Round answers to 0 decimal places, e.g. 5,275.)

				Number of Days Outstanding
		Total		0–30		31–60		61–90		91–120
Accounts receivable		$630,000		$390,000		$120,000		$80,000		$40,000
Estimated % uncollectible				2%		5%		10%		30%
Estimated uncollectible accounts		$		$		$		$		$

1. Record the bad debt adjusting entry using the information determined in part (a).

2. In the following year, $15,000 of the outstanding accounts receivable is determined to be uncollectible. Record the write off of the uncollectible accounts.

3. The company collects $4,000 of the $15,000 of accounts that was determined to be uncollectible in part (c). The company also expects to collect an additional $1,000. Record the journal entry (or entries) to restore the accounts receivable and the cash collected. Collection of the $1,000 is expected in the near future.

Answer 1

Complete the aging schedule and calculate the total estimated uncollectible accounts. (Round answers to 0 decimal places, e.g. 5,275.)

				Number of Days Outstanding
		Total		0–30		31–60		61–90		91–120
Accounts receivable		$630,000		$390,000		$120,000		$80,000		$40,000
Estimated % uncollectible				2%		5%		10%		30%
Estimated uncollectible accounts		$33800		$7800		$6000		$8000		$12000

Adjusting entry

Date	account and explanation	Debit	Credit
	Bad debt expense (33800+7000)	40800
	Allowance for doubtful accounts		40800

2) Journal entry

No	General Journal	Debit	Credit
	Allowance for doubtful accounts	15000
	Account receivable		15000

3) Journal entry

No	General Journal	Debit	Credit
	Account receivable	5000
	Allowance for doubtful accounts		5000
	Cash	4000
	Account receivable		4000