Question

Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $377,800...

Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $377,800 in its Accounts Receivable account and a credit balance of $4,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $383,000 in debit balances and $5,200 in credit balances. The company aged its accounts as follows:

Current $306,000
0-60 days past due 46,000
61-180 days past due 20,000
Over 180 days past due 11,000
$383,000


In the past, the company has experienced credit losses as follows: 1% of current balances, 5% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 40% of balances over six months past due. The company bases its allowance for doubtful accounts on an aging analysis of accounts receivable.

Required
a. Prepare the adjusting entry to record the allowance for doubtful accounts for the year.
b. Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.

a.

General Journal
Date Description Debit Credit
Dec.31 AnswerBad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivable Answer Answer
AnswerBad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivabl Answer Answer
To record allowance for credit losses.


b.

Current Assets:
AnswerAccounts ReceivableLess: Allowance for Doubtful Accounts Answer
AnswerAccounts ReceivableLess: Allowance for Doubtful Accounts Answer
Answer
Current Liabilities:
Customers' Overpayments Answer
Business   Accounting   
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Homework Answers

Answer #1
Computaiton of Estimated Balance of Allowance- Crdit Losses - Schuler Compan
Current 0-60Days 61-180 Days Over 180 Days TOTAL
Accounts receivables $306,000 $46,000 $20,000 $11,000 $383,000
% uncollectible 1% 5% 15% 40%
Estimated Balance for Allowance for Doubtful Accounts $3,060 $2,300 $3,000 $4,400 $12,760
Estimated Balance for Allowance for Doubtful Accounts would be $12760
Requirement: a - Adjusting Journal Entry-
Accounts title Debit Credit
Bad Debt Expense $7,560
Allowance for Doubtful Accounts
($12760-5200)		 $7,560
Partial Balance sheet
Acount Receivable ( Gross) $383,000.00
Less: Allowance for Doubtful debt $12,760.00
Account Recievable ( Net) $370,240.00
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