Hi ! I did the first 2 parts of the question, but can't get C & D Can someone please show me how to do it!

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[b]ABC Inc. generated $2.5 million in credit sales during the current year. Based on past experience, it is estimated that 1.5% of all credit sales will probe to be uncollectible. The balance of the allowance for doubtful accounts at December 31 is $6,900 credit before the year end adjustment for uncollectible accounts. Account receivable at December 31 consists of the follow:


Account Classification - Amount:

Current - $1,900,000
1-30 days past due - 150,000
31-60 days past due - 90,000
61-90 days past due - 50,000
Over 90 days past due - 20,000


a) Calculate bad debts expense and record the related journal entry for the current year using the percentage of credit sales method.

b) ABC has decided to write off all accounts that were over 90 days past due. Record the journal entry.

c) Show how Accounts Receivable will be presented on the Dec 31 balance sheet, with appropriate account balances, following the above adjustments. (HELP!! )

d) One of the customers whose $3000 accountat was written off paid in full. Record the journal entry. (HELP! )[/B

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///////My Answers//////

a) Bad debt expense = .015 x 2,500,000 = $37500

Journal Entry:
Debit: Bad Debt Expense 37500
Credit: Allowance for Doubtful Accounts 37500

b) Journal Entry:
Debit: Allowance for Doubtful Accounts 20000
Credit: Accounts Receivable 20000






Please someone help me with part c and d! Also can someone check if part a and b are right?

c) Re-balance the accounts that were affected by your entries. The presentation on the balance sheet looks something like:

Accounts receivables... 100
less Allowance for Doubtful Accounts... 10... 90

The 90 is called the net realizable value - the amount you think you will collect. (Without the leader dots - that's my way of attempting 2 columns on a balance sheet.)

Take the balances involved, recievables and allowance, and re-calculate the balances based on the two correct entries you did.

(d) If someone pays after the account has been written off, you need to reinstate the account before you can record the payment. If you wrote it off, it's no longer in the receivables. It's just a reversal of the write-off entry. Once that's done, do a normal receipt of payment on a receivable.

Quote:

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Originally Posted by morgaine300

c) Re-balance the accounts that were affected by your entries. The presentation on the balance sheet looks something like:

Accounts receivables.................................100
less Allowance for Doubtful Accounts............ 10 ..... 90

The 90 is called the net realizable value - the amount you think you will collect. (Without the leader dots - that's my way of attempting 2 columns on a balance sheet.)

Take the balances involved, recievables and allowance, and re-calculate the balances based on the two correct entries you did.

(d) If someone pays after the account has been written off, you need to reinstate the account before you can record the payment. If you wrote it off, it's no longer in the receivables. It's just a reversal of the write-off entry. Once that's done, do a normal receipt of payment on a receivable.

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Thanks so much!!
My answers for part a) and b) are correct, right?

Oops never mind! I just read your comment on them.. sorry!

Quote:

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Originally Posted by morgaine300

c) Re-balance the accounts that were affected by your entries. The presentation on the balance sheet looks something like:

Accounts receivables.................................100
less Allowance for Doubtful Accounts............ 10 ..... 90

The 90 is called the net realizable value - the amount you think you will collect. (Without the leader dots - that's my way of attempting 2 columns on a balance sheet.)

Take the balances involved, recievables and allowance, and re-calculate the balances based on the two correct entries you did.

(d) If someone pays after the account has been written off, you need to reinstate the account before you can record the payment. If you wrote it off, it's no longer in the receivables. It's just a reversal of the write-off entry. Once that's done, do a normal receipt of payment on a receivable.

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Is this right?

c)

Is the A/R now $2,172,500.00 for the balance sheet?

( I did 2,210,000-37,500)

d)

Dr: A/R 3000
Cr: Bad debt 3000
(reinstated the a/r)

Then finally:

Dr: Cash 3000
Cr: A/R 3000



Thanks:)

Quote:

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c)

Is the A/R now $2,172,500.00 for the balance sheet?

( I did 2,210,000-37,500)

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Look at your entry that includes the 37,500. Is receivables in that entry?

Also look back at my example. The balance sheet "presentation" is showing the balance of the receivables less the allowance for bad debt, not just the A/R balance. It can be shown as a net, but they'd probably like you to show both numbers.

Take the balances of both the receivables and the allowance, and apply the two entries that you made.

Quote:

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d)

Dr: A/R 3000
Cr: Bad debt 3000
(reinstated the a/r)

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(b) is a write-off, which you got correct. To reinstate an account, you reverse that. It's like un-doing that entry. That entry doesn't involve bad debt expense. That's only for the adjusting entry. What did you dr in the write-off that you now need to reverse?

Quote:

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then finally:

Dr: Cash 3000
Cr: A/R 3000

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That's correct.

Quote:

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Originally Posted by morgaine300

Look at your entry that includes the 37,500. Is receivables in that entry?

Also look back at my example. The balance sheet "presentation" is showing the balance of the receivables less the allowance for bad debt, not just the A/R balance. It can be shown as a net, but they'd probably like you to show both numbers.

Take the balances of both the receivables and the allowance, and apply the two entries that you made.

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Can you show me how to get and present the answer, please? :confused:

If you're to a bad debt chapter, you should know how to post entries. You have 2,210,000 in receivables before these entries. There's one credit to receivables of 20,000. What does that do to the receivables balance? (If you don't know, I'd suggest you review your dr/cr rules. i.e. what is the whole point of crediting an asset account?)

You have a 6900 credit balance in the allowance account. You've got one entry that credits it 37,500. What does a credit do to a credit balance? Then you have a 20,000 debit to that account, which does what to it?

I've already shown you what it looks like on the balance sheet.