Bulldog Manufacturing had a $1,250 debit balance in Allowance for Doubtful Accounts at December 31, 2019 before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible Current Accounts ....................................... $164,000 2% 1-30 days past due ..................................... 17,000 3% 31-60 days past due ................................... 6,500 5% 61-90 days past due ................................... 3,250 14% Over 90 days past due ............................... 5,000 40% Total Accounts Receivable ......................... $195,750 Additional Information: On January 20, 2020, management determined that a customer, Joe’s Supplies Inc., went bankrupt. As a result, their full balance outstanding of $4,000 was written off. On February 15, 2020, Bulldog Manufacturing collected $1,500 of the balance that had been owing from Joe’s through the legal bankruptcy proceedings. Instructions Prepare the adjusting entry at December 31, 2019 for the estimated uncollectible accounts. (no explanations required) Record the write-off on January 20, 2020. (no explanations required) Record the collection on February 15, 2020. (no explanations required)
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Bulldog Manufacturing had a $1,250 debit balance in Allowance for Doubtful Accounts at December 31, 2019 before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:
|
|
|
Estimated Percentage |
|
|
|
Uncollectible |
|
Current Accounts ....................................... |
$164,000 |
2% |
|
1-30 days past due ..................................... |
17,000 |
3% |
|
31-60 days past due ................................... |
6,500 |
5% |
|
61-90 days past due ................................... |
3,250 |
14% |
|
Over 90 days past due ............................... |
5,000 |
40% |
|
Total Accounts Receivable ......................... |
$195,750 |
|
Additional Information:
- On January 20, 2020, management determined that a customer, Joe’s Supplies Inc., went bankrupt. As a result, their full balance outstanding of $4,000 was written off.
- On February 15, 2020, Bulldog Manufacturing collected $1,500 of the balance that had been owing from Joe’s through the legal bankruptcy proceedings.
Instructions
- Prepare the
adjusting entry at December 31, 2019 for the estimated uncollectible accounts. (no explanations required) - Record the write-off on January 20, 2020. (no explanations required)
- Record the collection on February 15, 2020. (no explanations required)
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