Question

Entries for bad debt expense under the direct write-off and allowance methods Instructions Chart of Accounts Journal Final Question Instructions Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31 Customer Amount Kim Abel $24,300 Lee Drake 30,600 Jenny Green 29,900 Mike Lamb 17,900 Total $102,700

Answer 1

a)	Date	Account title and explanation				Debit	Credit
		Bad debts expense				102,700
		Account receivable -kim Abel					24,300
		Account receivable -Lee Drake					30,600
		Account receivable -Jenny Green					29,900
		Account receivable -Mike Lamb					17,900
	Estimating bad debts
b)	Aging class		Receivable	Estimated	Estimated
			balance	%	bad debts
			(a)	(b)	c=A*b
	0--30		730,000	1%	7300
	31--60 days		290,000	2%	5800
	61--90 days		114,000	15%	17100
	91---120 days		70,000	30%	21000
	more than 120 days		92,000	60%	55200
	total estimated bad debts				106400
	write off	Allowance for bad debts				102,700
		Account receivable -kim Abel					24,300
		Account receivable -Lee Drake					30,600
		Account receivable -Jenny Green					29,900
		Account receivable -Mike Lamb					17,900
	adjustment	Bad debts expense				120800
		Allowance for bad debts					120800
		(the allowance account had 88300 credit and amount written off
		is $102,700,thus leaving a debit balance of $14,400
		adjustment therefore required is 14400+106400=					120800
c)		lower	18,100
		(this is because bad debts expense provided under allowance method of
		$117,150 is more than the bad debts expense under direct write off method)