This I totally do not understand. I have to put this in a general journal but don't understand it.


Caplan Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense. As of December 31, Caplan's accountant prepared the following data about ending receivables: $20,000 was not yet due (1percent expected not to be collected), $10,000 was 1-60 days past due (4 percent expected not to be collected), and $2,000 was over 60 days past due (8 percent expected not to be collected). At December 31, Allowance for Uncollectible Accounts had a credit balance prior to adjustment of $200. Prepare Caplan's end-of-period adjusting for estimated uncollectible accounts. Also prepare the entry that would have been made had the credit balance instead been a debt balance.

If you can make any sense of this please let me know.

Quote:

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Originally Posted by sweetkendra

This I totally do not understand. I have to put this in a general journal but don't understand it.


Caplan Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense. As of December 31, Caplan's accountant prepared the following data about ending receivables: $20,000 was not yet due (1percent expected not to be collected), $10,000 was 1-60 days past due (4 percent expected not to be collected), and $2,000 was over 60 days past due (8 percent expected not to be collected). At December 31, Allowance for Uncollectible Accounts had a credit balance prior to adjustment of $200. Prepare Caplan's end-of-period adjusting for estimated uncollectible accounts. Also prepare the entry that would have been made had the credit balance instead been a debt balance.

If you can make any sense of this please let me know.

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December 31, Acc. Rec... Age of Acc. Rec... Exp.%uncollec... Ammount
$20,000... not yet due... 1%... $200
$10,000... 1-60 days past due... 4%... $400
$2,000... over 60 days past... 8%... $160

Your expected uncollectible amount is $760, which is what your balance for doubtful accounts should be, then

Dr. Bad debts expense... 560
Cr. Allowance for doubtful accounts... 560
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200+560=760
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if the 200 would had been a debit instead of a credit then
Dr. Bad debts expense... 960
Cr. Allowance for doubtful accounts... 960
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960-200=760
note allowance for doubtful accounts or allowance for uncollectible accounts is the same