Question

At December 31, 2018, Novak Corp. Company had a credit balance of $ 18,000 in Allowance for Doubtful Accounts. During 2019, Novak Corp. wrote off accounts totaling $ 13,300. One of those accounts ($ 3,200) was later collected. At December 31, 2019, an aging schedule indicated that the balance in Allowance for Doubtful Accounts should be $ 27,200. Prepare journal entries to record the 2019 transactions of Novak Corp. Company

Answer 1

Step-by-step explanation:

The journal entries are shown below:

1. Allowance for Doubtful Accounts A/c Dr $ 13,300

To Accounts receivable A/c $ 13,300

(Being written off amount is recorded)

2. Accounts receivable A/c Dr $3,200

To Allowance for Doubtful Accounts A/c $3,200

(Being reverse written off)

3. Cash A/c Dr $3,200

To Accounts receivable A/c $3,200

(Being amount collected)

4. Bad debt expense A/c Dr $19,300

To Allowance for doubtful debts $19,300

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

Ending balance of Allowance for Uncollectible Accounts = Beginning balance of Allowance for Uncollectible Accounts + 2019 bad debts - 2019 write off amount + collected amount

$27,200 = $18,000 + 2019 bad debts - $13,300 + $3,200

$27,200 = $7,900+ 2019 bad debts

So,2019 bad debts = $27,200 - $7,900 = $19,300