Question

At December 31, the Azuza Company had a balance of $754,000 in its Accounts Receivable account...

At December 31, the Azuza Company had a balance of $754,000 in its Accounts Receivable account and a credit balance of $9,000 in the Allowance for Doubtful Accounts account. The company aged its accounts as follows:

Current $608,000
0–60 days past due 88,000
61–180 days past due 40,000
Over 180 days past due 18,000
$754,000


In the past, the company has experienced credit losses as follows: one percent of current balances, five percent of balances 0–60 days past due, 20 percent of balances 61–180 days past due, and 40 percent of balances over six months past due. The company bases its allowance for doubtful accounts on an aging analysis of accounts receivable.

Required
a. Prepare the adjusting entry to record the allowance for doubtful accounts for the year.

b. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.

a.

General Journal
Date Description Debit Credit
Dec.31 Bad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivable
Bad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivable
To record allowance for credit losses.


b. Do not use negative signs with your answers.

Current Assets:
Accounts ReceivableLess: Allowance for Doubtful Accounts
Accounts ReceivableLess: Allowance for Doubtful Accounts

Homework Answers

Answer #1

Calculation as follows:

Current Due 608000 1% 6080
0 - 60 88000 5% 4400
61 - 180 40000 20% 8000
More than 180 18000 40% 7200
754000 25680

Estimated Amount = 25680

Allowance account has credit balance of 9000

So recorded amount will be 25680 - 9000 = 16680

1

Entry Will be

Date Accounts and Explanation Debit Credit
31-Dec Bad Debt Expense A/c Dr 16680
To Allowance on Doubtful A/c 16680

2

Current Assets
Accounts Receivable 754000
Less : Allowance on Doubtful Accounts 25680 728320
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $377,800...
Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $377,800 in its Accounts Receivable account and a credit balance of $4,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $383,000 in debit balances and $5,200 in credit balances. The company aged its accounts as follows: Current $306,000 0-60 days past due 46,000 61-180 days past due 20,000 Over 180 days past due 11,000 $383,000 In the past, the company...
Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $386,600...
Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $386,600 in its Accounts Receivable account and a credit balance of $4,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $392,000 in debit balances and $5,400 in credit balances. The company aged its accounts as follows: Current $308,000 0-60 days past due 49,000 61-180 days past due 21,000 Over 180 days past due 14,000 $392,000 In the past, the company...
At December 31, 2019 Barber Company had a balance of $420,000 in accounts receivable and an...
At December 31, 2019 Barber Company had a balance of $420,000 in accounts receivable and an unadjusted credit balance of $3,500 in its allowance for uncollectible accounts. The company then aged its accounts as follows. Current $346,000; 1-60 days past due $48,000; 61-180 days past due $17,000; Over 180 days past due $9,000; Total accounts receivable $420,000. The company has experienced losses as follows: 2% of current balances; 5% of balances 1-60 days past due; 15% of balances 61-180 past...
Estimating Bad Debts Expense and Reporting of Receivables At December 31, 2013, Sunil Company had a...
Estimating Bad Debts Expense and Reporting of Receivables At December 31, 2013, Sunil Company had a balance of $600,000 in its accounts receivable and an unused balance of $6,720 in its allowance for uncollectible accounts. The company then aged its accounts as follows: Current $486,400 0-60 days past due 70,400 61-180 days past due 28,800 Over 180 days past due 14,400 Total accounts receivable $600,000 The company has experienced losses as follows: 1% of current balances, 5% of balances 0-60...
Estimating Bad Debts Expense and Reporting Receivables At December 31, Barber Company had a balance of...
Estimating Bad Debts Expense and Reporting Receivables At December 31, Barber Company had a balance of $294,000 in its accounts receivable and an unused balance of $1,820 in its allowance for uncollectible accounts. The company then aged its accounts as follows. Current$242,200 1–60 days past due33,600 61–180 days past due11,900 Over 180 days past due6,300 Total accounts receivable$294,000 The company has experienced losses as follows: 1% of current balances, 5% of balances 1–60 days past due, 15% of balances 61–180...
Estimating Bad Debts Expense and Reporting of Receivables At December 31, 2016, Sunil Company had a...
Estimating Bad Debts Expense and Reporting of Receivables At December 31, 2016, Sunil Company had a balance of $375,000 in its accounts receivable and an unused balance of $4,200 in its allowance for uncollectible accounts. The company then aged its accounts as follows: Current $304,000 0–60 days past due 44,000 61–180 days past due 18,000 Over 180 days past due 9,000 Total accounts receivable $375,000 The company has experienced losses as follows: 1% of current balances, 5% of balances 0–60...
Company had a $300 balance in the Allowance for Doubtful Accounts account at December 31, 2020,...
Company had a $300 balance in the Allowance for Doubtful Accounts account at December 31, 2020, before the current year's adjustment for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible Current Accounts $170,000 1% 1–30 days past due 15,000 3% 31–60 days past due 12,000 6% 61–90 days past due 5,000 15% Over 90 days past due 9,000 30% Total Accounts Receivable $211,000 Required Calculate the estimated total uncollectable amount Using a tabular summary,...
Credit Losses Based on Accounts Receivable Maxell, Inc., analyzed its accounts receivable balances at December 31,...
Credit Losses Based on Accounts Receivable Maxell, Inc., analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: Age Group Balance Probability of Noncollection 0-30 days past due $101,000 1% 31-60 days past due 19,000 3% 61-120 days past due 21,000 6% 121-180 days past due 8,000 10% Over 180 days past due 3,000 20% $152,000 The company handles credit losses using the allowance...
Reporting Uncollectible Accounts and Accounts Receivable LaFond Company analyzes its accounts receivable at December 31, 2016,...
Reporting Uncollectible Accounts and Accounts Receivable LaFond Company analyzes its accounts receivable at December 31, 2016, and arrives at the aged categories below along with the percentages that are estimated as uncollectible. Age Group Accounts Receivable Estimated Loss % Current (not past due) $250,000 0.5% 1–30 days past due 90,000 1.0 31–60 days past due 20,000 2.0 61–120 days past due 11,000 5.0 121–180 days past due 6,000 10.0 Over 180 days past due 4,000 25.0 Total accounts receivable $381,000...
Kiley Company had a $900 credit balance in Allowance for Doubtful Accounts at December 31, 2005,...
Kiley Company had a $900 credit balance in Allowance for Doubtful Accounts at December 31, 2005, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible Current Accounts $120,000 1% 1-30 days past due 12,000 3% 31-60 days past due 10,000 6% 61-90 days past due 5,000 12% Over 90 days past due 8,000 30% Total Accounts Receivable $155,000 Instructions Please identify each of your answers with the letter of...