Answer To Accounting Question BD No 1 On Accounts Receivables And Bad Debts

October 13th, 2006 Comments off
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Answer to Question No BD 1(a):

Being write off of accounts receivables.

Debit : Allowance for uncollectible accounts $64,000

Credit: Accounts receivable $64,000

Being bad debt expense for the year.

Debit : Bad Debt Expense $46,000

Credit: Allowance for uncollectible accounts $46,000

Computation of bad debt expense for the year:

Allowance for uncollectible accounts  b/f 1/1/05 $68,000

Less: Receivables written off ($64,000)

Balance, before adjusting entry for 2005 bad debts $ 4,000

Required Allowance:2% x $2,500,000 ($50,000)

Bad Debt expense $46,000

Answer to Question BD No.1(b):

Balance Sheet As At 31 st December 2005

Accounts receivables, net of $50,000

in allowance for uncollectible accounts $2,450,000

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Financial Accounting

 
 

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