Question

The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2019:

Number of Days Unpaid	Total Accounts Receivable			Historical % Uncollectible
Not yet due	$	126,500			2	%
1-30 days past due		89,200			12	%
31-60 days past due		53,600			18	%
Over 60 days past due		31,800			35	%

Required:

1. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $28,947 on July 31, 2019. Prepare the required adjusting entry to record Bad Debt Expense for the year.

2. Johnston Supplies, Inc. writes off $3,081 of uncollectible accounts on August 15, 2019. Prepare the required adjusting entry to record the write-off.

3. Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15, 2019.

Answer 1

Estimated allowance for doubtful accounts = (126500*2%+89200*12%+53600*18%+31800*35%) = $34012

Adjusting entry

Date	account and expalnation	debit	credit
	Bad debt expense (34012-28947)	5065
	Allowance for doubtful accounts		5065
	(To record adjusting entry)

2) Journal entry

Date	account and explanation	debit	credit
Aug 15	Allowance for doubtful accounts	3081
	Account receivable		3081
	(To record write off)

T-account

Account receivable	3081	Beg Bal	34012
		End Bal	30931

Allowance for doubtful accounts on aug 31,2019 = $30931 credit