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P9-3A Journalize entries to record transactions related to bad debts
Presented below is an aging schedule for Halleran Company.
Customer Total Not yet Due 1-30 31-60 61-90 Over 90
Anders 22,000$ 10,000$ 12,000$
Blake 40,000 40,000$
Coulson 57,000 16,000 6,000 35,000
Deleon 34,000 34,000
Others 132,000 96,000 16,000 14,000 6,000
285,000$ 152,000$ 32,000$ 26,000$ 35,000$ 40,000$
Estimated
Percentage
Uncollectible 3% 6% 13% 25% 50%
Total Estimated
Bad Debts
$ 38,610 $ 4,560 $ 1,920 $ 3,380 $ 8,750 $ 20,000
At December 31, 2017, the unadjusted balance in Allowance for Doutful Accounts is a credit of $12,000.
Instructions:
(a) Journalize and post the adjusting entry for bad debts at December 31, 2017.
(b) Journalize and post the allowance account the following events and transactions in the year 2018.
(1) On March 31, a $1,000 customer balance originating in 2017 is judged uncollectible.
(2) On May 31, a check for $1,000 is received from the customer whose account was written off as uncollectible
on March 31.
( c) Journalize the adjusting entry for bad debts on December 31, 2018, assuming that the unadjusted balance in
the Allowance for Doubtful Accounts is a debit of $800 and the aging schedule indicates that total estimated bad
debts will be $31,600.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
(a)
Dec. 31 Value
Value
Date Ref. Debit Credit Balance
2017
Dec. 31 Value Value
Date Ref. Debit Credit Balance
2017
Dec. 31 12,000
Dec.31 Adjusting Value ?
2018
Mar. 31 Value ?
31-May Value ?
2018
(b) (1) Mar. 31 Value Value
(b) (2) May 31 Value Value
Account
Account
Number of Days Past Due
Account
Account
Explanation
Bad Debt Expense
Balance
Account
Adjusting
Allowance for Doubtful Accounts
Explanation
Account
May 31 Value Value
(c) 2018
Dec 31 Value Value
After you have completed the requirements of P9-3A, consider these additional questions.
Answers are on the other tab in this file.
1. Suppose the amount uncollectible on March 31 is changed to $1,800 and no cash was received from customer subsequent to
the write-off of accounts receivable. What would be the balance of the Allowance for Doubtful Accounts before adjustment?
2. Suppose the balance in the Allowance for Doubtful Accounts before adjustment was $2,100 debit. An aging schedule indicates
that total estimated bad debts will be $38,000. What is the year-end adjustment for bad debts for 2017?
Account
Account
Account
Account
P9-3A Solution
(a) Dec. 31 26,610
26,610
($38,610 - $12,000 = $26,610)
Date Ref. Debit Credit Balance
2017
Uncollectible
Total Estimated Bad Debts
Date Ref. Debit Credit Balance
2017
Dec. 31 12,000
Dec.31 Adjusting 26,610 38,610
2018
(b) (1) Mar. 31 1,000 1,000
Bad Debt Expense
Allowance for Doubtful Accounts
Bad Debt Expense
Explanation
Allowance for Doubtful Accounts
Explanation
Balance
Accounts Receivable
Allowance for Doubtful Accounts
P9-3A Solution to Additional Questions
1. Suppose the amount uncollectible on March 31 is changed to $1,800 and no cash was received from customer subsequent to
the write-off of accounts receivable. What would be the balance of the Allowance for Doubtful Accounts before adjustment?
Date Ref. Debit Credit Balance
2017
Dec. 31 12,000
Dec.31 Adjusting 26,610 38,610
Total Estimated Bad Debts
2. Suppose the balance in the Allowance for Doubtful Accounts before adjustment was $2,100 debit. An aging schedule indicates
that total estimated bad debts will be $38,000. What is the year-end adjustment for bad debts for 2017?
Allowance for Doubtful Accounts
Explanation
Balance
