Question

The December 31, 2019 unadjusted trial balance of a company disclosed the following balances:

Accounts Receivable
Allowance for Doubtful Accounts Sales
Sales Returns and Allowances

$200,000 DR $1,000 CR $710,000 CR $10,000 DR

Additionally, the firm has given up trying to collect on $5,000 of its accounts receivable but has not yet recorded the write-off entry. The firm does not use the direct write off method to estimate bad debt expense.

Required

a)

b)

c)

Provide the entry for the write-off of the receivable

Assume that after the firm recorded the $5,000 of write-offs and the firm uses the percentage of sales allowance method for recording bad debt expense. The firm has experienced an average 6% rate of non-collection based on sales, provide the entry to record bad debt expense for 2019.

Assume that after the firm recorded the $5,000 of write-offs, it determined that 18% of its remaining accounts receivable will be uncollectible under the aging method. Provide the entry to record bad debt expense.

Answer 1