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Problem # 1: Bad debts (uncollectible Accounts) The jorge company operates on a calendar year and...

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

Homework Answers

Answer #1
Date Account Title Debit Credit
A.
12/1/2018 Accounts receivable 15000
Allowance for doubtful accounts 15000
B.
12/31/2018 Bad debt expense 12000
Allowance for doubtful accounts 12000
(500000*2%)+2000
C.
12/31/2018 Bad debt expense 25000
Allowance for doubtful accounts 25000
(15000+10000)
D.
12/31/2018 Allowance for doubtful accounts 5000
Accounts receivable 5000
(restoration of Issac's a/c)
Cash 5000
Accounts receivable 5000
(Receipt of the above check)
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