Question

On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:
  

Accounts	Debit			Credit
Cash	$	27,000
Accounts Receivable		50,000
Allowance for Uncollectible Accounts				$	6,100
Inventory		21,900
Land		65,000
Equipment		24,500
Accumulated Depreciation					3,400
Accounts Payable					30,400
Notes Payable (6%, due April 1, 2019)					69,000
Common Stock					54,000
Retained Earnings					25,500
Totals	$	188,400		$	188,400
At the end of January, $30,000 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected.

Answer 1

Total Estimated uncollectibles at the end of January = ($30,000*30%)+[($50,000-$30,000)*5%]

= $9,000+1,000 = $10,000

Beg. Balance in Allowance for Uncollectible accounts = $6,100 credit

Bad debt expense for January = $10,000 - $6,100 = $3,900

Journal Entry (Amounts in $)

Date	Account Titles and Explanations	Debit	Credit
01/31/2018	Bad debt expense	3,900
	Allowance for Uncollectible Accounts		3,900
	(To record the bad debt expense for January)

Ending Balance in Allowance for Uncollectible Accounts = $6,100+$3,900 = $10,000

Gross Accounts Receivable = $50,000

Net Accounts Receivable as on January 31= $50,000 - $10,000 = $40,000