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Millennium Associates records bad debt using the allowance, balance sheet method. They recorded $299,420 in accounts...

Millennium Associates records bad debt using the allowance, balance sheet method. They recorded $299,420 in accounts receivable for the year, and $773,270 in credit sales. The uncollectible percentage is 3.2%. On November 22, Millennium Associates identifies one uncollectible account from Angel’s Hardware in the amount of $3,650. On December 18, Angel’s Hardware unexpectedly pays its account in full. Record journal entries for the following.

A.Year-end adjusting entry for 2017 bad debt

B.November 22, 2018 identification entry

C.Entry for payment on December 18, 2018

Business   Accounting   
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Answer #1

Journal Entries:-

1.

Bad Debt Expenses A/c DR $24,745 (773,270*3.2%)

To Allowance for Doubtful Accounts A/c 24,745

(Being the year-end adjusted entry for bad debt expenses and allowance based on the uncollectible percentage)

2.

Allowance for Doubtful Accounts A/c DR $3,650

To Angel's Hardware A/c $3,650

(Being entry recorded for writing off uncollectible account from Angel's Hardware Account)

3.

Angel's Hardware A/c DR $3,650

To Allowance for Doubtful Accounts A/c $3,650

Cash A/c DR $3,650

To Angel's Hardware A/c $3,650

(Being the entries recorded (a) reversal of written off uncollectible account from Angel's Hardware Account and (b) the amount received from Angel's Hardware.)  

(Note:- I have rounded off Bad debt expenses amount into the whole number.)

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