Question

The Accounts Receivable balance for Wedge Company at December​ 31, 2017​, was $ 28000. During 2018​, Wedge earned revenue of $ 452000 on account and collected $ 330 000 on account. Wedge wrote off $ 6000 receivables as uncollectible. Industry experience suggests that uncollectible accounts will amount to 6​% of accounts receivable.

Requirement 1. Assume Wedge had an unadjusted $ 2100 credit balance in Allowance for Bad Debts at December ​31, 2018. Journalize Wedge​'s December ​31, 2018​, adjustment to record bad debts expense using the​ percent-of-receivables method. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.) Date Accounts and Explanation Debit Credit Dec. 31

Requirement 2. Assume Wedge had an unadjusted $ 2 000 debit balance in Allowance for Bad Debts at December ​31, 2018. Journalize Wedge​'s December ​31, 2018​, adjustment to record bad debts expense using the​ percent-of-receivables method. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.) Date Accounts and Explanation Debit Credit Dec. 31

Answer 1

1) Adjusting entry :

Account receivable before adjusting entry = (28000+452000-330000-6000) = 144000

Date	account and explanation	debit	credit
Dec 31,2018	Bad debt expense (144000*6%-2100)	6540
	Allowance for doubtful accounts		6540
	(To record adjusting entry)

2) Adjusting entry :

Account receivable before adjusting entry = (28000+452000-330000-6000) = 144000

Date	account and explanation	debit	credit
Dec 31,2018	Bad debt expense (144000*6%+2000)	10640
	Allowance for doubtful accounts		10640
	(To record adjusting entry)