The allowance for doubtful accounts of Beta Care Limited had a credit balance of $1,500 at December 31, 2019, before the current year provision for uncollectible accounts. Based on historical data, the Accountant prepared the following schedule: Period $ % Estimated Collectible Current 200,000.00 99% 1-30 days 50,000.00 97% 31-60 days 20,000.00 94% 61-90 days 10,000.00 90% Over 90 days 5,000.00 80% Total Accounts Receivable 285,000.00 Required: 1. Determine the total uncollectible Accounts Receivable as at December 31, 2019. 2. Journalize the entry on December 31, 2019 to recognize bad debt expense. 3. Assume that the Allowance for doubtful account had a $1,500 debit balance. Prepare the journal entry for the current year provision.
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.
The allowance for doubtful accounts of Beta Care Limited had a credit balance of $1,500 at
December 31, 2019, before the current year provision for uncollectible accounts. Based on
historical data, the Accountant prepared the following schedule:
Period $ % Estimated Collectible
Current 200,000.00 99%
1-30 days 50,000.00 97%
31-60 days 20,000.00 94%
61-90 days 10,000.00 90%
Over 90 days 5,000.00 80%
Total Accounts Receivable 285,000.00
Required:
1. Determine the total uncollectible Accounts Receivable as at December 31, 2019.
2. Journalize the entry on December 31, 2019 to recognize
3. Assume that the Allowance for doubtful account had a $1,500 debit balance. Prepare the
4. Assume that on December 31, 2019, a previously written off account of $900, was
subsequently collected. Prepare the journal entry required to record the collection.
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