Question

The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2016:

Number of Days Unpaid Total Accounts Receivable Historical % Uncollectible
Not yet due $128,200 3%
1-30 days past due $90,900 13%
31-60 days past due $55,300 19%
Over 60 days past due $33,500 37%
Required:
a. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,457 on July 31, 2016. Prepare the required adjusting entry to record Bad Debt Expense for the year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
b. Johnston Supplies, Inc. writes off $3,251 of uncollectible accounts on August 15, 2016. Prepare the required adjusting entry to record the write-off. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.
c. Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15

Answer 1

a. June 30, 2016 adjusting entry for bad debt expense

Dr Bad debt expense 9,108

Cr Allowance for doubtful accounts 9,108

b. August 15, 2016, uncollectible accounts are written off

Dr Allowance for doubtful accounts 3,251

Cr Accounts receivable 3,251

c. Allowance for doubtful accounts

debit credit

June 30, 2016 $38,565

August 15, 2016 $3,251

August 15, 2016 $35,314

Step-by-step explanation:

Number of Days Total Accounts Historical % Total

Unpaid Receivable Uncollectible

Not yet due $128,200 3% $3,846

1-30 days past due $90,900 13% $11,817

31-60 days past due $55,300 19% $10,507

Over 60 days past due $33,500 37% $12,395

Total $38,565