Question

Problem 8-4A

Rigney Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year-end.

Calculate the total estimated bad debts based on the below information

				Number of Days Outstanding
		Total		0–30		31–60		61–90		91–120		Over 120
Accounts receivable		286,200		94,800		60,800		55,400		41,400		$33,800
% uncollectible				2%		5%		6%		9%		21%
Estimated Bad debts		$		$		$		$		$		$

(b)		Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $8,500 debit.
(c)		Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
(d)		The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection

No	Account Titles and Explanation	Debit	Credit
(b)
(c)
(d)
	(To reverse write-off)
	(To record collection of write off)

Answer 1

a
	Number of Days Outstanding
	Total	0–30	31–60	61–90	91–120	Over 120
Accounts receivable	286200	94800	60800	55400	41400	33800
% uncollectible		2%	5%	6%	9%	21%
Estimated Bad debts	19084	1896	3040	3324	3726	7098

No.	Account Titles and Explanation	Debit	Credit
b	Bad debts expense	27584		=19084+8500
	Allowance for Doubtful Accounts		27584
c	Allowance for Doubtful Accounts	5000
	Accounts Receivable		5000
d	Accounts Receivable	5000
	Allowance for Doubtful Accounts		5000
	(To reverse write-off)
	Cash	5000
	Accounts Receivable		5000
	(To record collection of write off)