Question

If the company decided to use 3.5% of sales as uncollectible instead of an aging schedule, and sales totaled $1,232,139, provide the entry to record bad debt expense, including a new t-account for the allowance. Assume the same information from #13 for beginning balance, write-off, and collection of write-off. If the beginning balance in Allowance for Doubtful Accounts is $10,574 and $7,813 was written off during the year (assume $1,313 of this amount was later collected this year), what is the amount of the bad debt expense? Provide a t-account for the allowance account as well as the applicable journal entries to record the write-off, subsequent collection of a portion of the write off, and the bad debt expense.

Answer 1

13. what is the amount of the bad debt expense = 0

T - account:

	Allowance for doubtful accounts
a	7813	Op bal	10574
		b	1313
		Cl bal	4074

Journal entries:

S No	Account titles	Debit	Credit
a	Allowance for doubtful accounts	7813
	Accounts receivable		7813
	[Write off of bad debts]
b	Accounts receivable	1313
	Allowance for doubtful accounts		1313
	[reinstate the account]
	Cash	1313
	Accounts receivable		1313
	[Cash receipt of written off account]

14.

S No	Account titles	Debit	Credit
c	Bad debt expense	43125
	Allowance for doubtful accounts		43125
	[ Uncollectible accounts estimate]
	[1232139*3.5%]

New T account:

	Allowance for doubtful accounts
a	7813	Op bal	10574
		b	1313
		c	43125
		Cl bal	47199