Question

# Problem 8-4A Rigney Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced...

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)

 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)