Question

A summary of Klugman Company's December 31, 2018, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:

Age Group	Amount				%
0–60 days	$	57,000			.5
61–90 days		20,500			1.0
91–120 days		2,700			10.0
Over 120 days		1,100			50.0

The allowance for uncollectible accounts had a balance of $1,370 on January 1, 2018. During the year, bad debts of $720 were written off.

Required:
Prepare all journal entries for 2018 with respect to bad debts and the allowance for uncollectible accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Solution:

Computation of estimated uncollectibles - Klugman Company
Age-group	Account receivables balance	Estimated percentage uncollectible	Estimated Uncollectible
0-60 days	$57,000.00	0.5%	$285.00
61-90 days	$20,500.00	1%	$205.00
91-120 days	$2,700.00	10%	$270.00
Over 120 days	$1,100.00	50%	$550.00
	$81,300.00		$1,310.00

Journal Entries - Klugman Company
Event	Particulars	Debit	Credit
1	Allowance for uncollectible accounts Dr	$720.00
	To Accounts Receivables		$720.00
	(To bad debts written off)
2	Bad debts Expense Dr ($1,310 + $720 - $1,370)	$660.00
	To Allowance for uncollectible accounts		$660.00
	(Being provision for uncollectible accounts recorded)