Question

On January 1, 2010, the balance in Tabor Co.'s Allowance for Bad Debts account was $13,085. During the first 11 months of the year, bad debts expense of $21,937 was recognized. The balance in the Allowance for Bad Debts account at November 30, 2010, was $9,919.Required:(a) What was the total of accounts written off during the first 11 months? (Hint: Make a T-account for the Allowance for Bad Debts account.)Bad debt write offs $(b) As the result of a comprehensive analysis, it is determined that the December 31, 2010, balance of the Allowance for Bad Debts account should be $9,450. Show the adjustment required in the journal entry format.Allowance for bad debt Debit $Bad debt expenses Credit $

Answer 1

(a) What was the total of accounts written off during the first 11 months?

bad debts written for the first 11 months = allowance for bad debt accounts January 1 balance + bad debt expense - allowance for bad debt accounts November 30 balance = $13,085 + $21,937 - $9,919 = $25,103

(b) As the result of a comprehensive analysis, it is determined that the December 31, 2010, balance of the Allowance for Bad Debts account should be $9,450. Show the adjustment required in the journal entry format.Allowance for bad debt Debit $Bad debt expenses Credit $

to determine the amount of bad debt expense that must be adjusted, we must subtract the estimated balance in December 31 from the balance in November 30 = $9,919 - $9,450 = $469. Since the November 30 amount is larger, it means that we over estimated our bad debt expense and it must be reduced:

Dr Allowance for doubtful accounts 469

Cr Accounts receivable 469