Problem # 1: Bad debts (uncollectible Accounts)
The jorge company operates on a calendar year and uses " the
allowance method" in connection with their uncollectible accounts
receivable
Required: In a two column journal record the following
instruction:
A) At 12/01/18 wrote off the account of Asad for $15,000; he
was declared a bankrupt.
NOTE: Parts B, C & D below are all INDEPENDENT from each
other:
B) After this write off, the Jorge Company had the following
selected account balances at 12/31/18:
Accounts Receivable $100,000 (Debit)
Allowance for doubtful accounts 2,000 (Debit)
Net Credit Sales $500,000 (Credit)
Based on the company's proir experience, uncollectible
accounts is estimated at 2% of Net Credit Sales. Record the
adjusting entry at 12/31/18.
C) At 12/31/18 and after the write-off in Part a) above, it
was determined that based on the Aging Schedule and computation,
that the company required a balance of $10,000 in the allowance for
doubtful accounts. Record the adjusting entry at 12/31/18
D) The Jorge Company had previously written on Issac's account
for $9,500 in Octobor, 2015, Issac now wants to do business with us
and agrees to pay us $5,000 of the previously owed amount, he sent
us a check for $5,000 on 12/31/18