For a Business That Uses the Allowance Method of Accounting

question 121

Essay

For a business that uses the allowance method of accounting for uncollectible receivables:
(a)Journalize the entries to record the following:
(1)Record the adjusting entry at December 31, the end of the first fiscal year, to record the bad debt expense. The accounts receivable account has a balance of $800,000, and the contra asset account before adjustment has a debit balance of $600. Analysis of the receivables indicates uncollectible receivables of $18,000.
(2)In March of the next year, the $350 owed by Fronk Co. on account is written off as uncollectible.
(3)In November of the next year, $200 of the Fronk Co. account is reinstated and payment of that amount is received.
(4)In December of the next year, $400 is received on the $600 owed by Dodger Co. and the remainder is written off as uncollectible.
(b)Redo the entries in steps (2), (3), and (4) assuming the company uses the direct write-off method.