Question

The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2019: Number of Days Unpaid Total Accounts Receivable Historical % Uncollectible Not yet due $ 127,400 3 % 1-30 days past due 90,100 13 % 31-60 days past due 54,500 19 % Over 60 days past due 32,700 33 % Required: The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,217 on July 31, 2019. Prepare the required adjusting entry to record Bad Debt Expense for the year. Johnston Supplies, Inc. writes off $3,171 of uncollectible accounts on August 15, 2019. Prepare the required adjusting entry to record the write-off. Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15, 2019.

Answer 1

bad debt expense 7,464 debit

allowance for doubtful accounts 7,464 credit

--to record year-end adjustment for bad debt expense--

allowance for doubtful accounts 3,171 debit

accounts receivables 3,171 credit

--to record write-off of a custoemr account--

Step-by-step explanation:

We multiply each balance by their expected uncollectible amount:

Date // Amount // Expected // uncollectible

not due 127400 0.03 3,822

up to 30 90100 0.13 11,713

up to 60 54500 0.19 10,355

above 61 32700 0.33 10,791

Total 36,681

Allowance balance 29,217

Difference 36,681 - 29,217 = 7,464

The write-off will decrease both, account recievable and the allowance

Allowance for doubtful accounts

Debit Credit

36,681

3,171

Balance 33,510