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PROBLEM 1 Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December...

PROBLEM 1

Molina Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2020, 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                                             20,000                               3%

         31–60 days past due                                           10,000                               6%

         61–90 days past due                                           10,000                             12%

         Over 90 days past due                                         8,000                             30%

         Total Accounts Receivable                             $168,000

Instructions

(a)   Prepare, in good form, the adjusting journal entry on December 31, 2020, to recognize bad debt expense.

(b)   Assume the same facts as above except that the Allowance for Doubtful Accounts account had a $500 debit balance before the current year's provision for uncollectible accounts. Prepare, in good form, the adjusting journal entry for the current year's provision for uncollectible accounts.

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