How to calculate bad debt expense?
When aging of accounts is used to estimated bad debt, you can ignore sales. This is the only information you need. Accounts receivable at December 31 2,549,000 Accounts receivable written off during year 95,600 Dr Allowance for Doubtful Accounts 95,600 Cr Accounts Receivable 95,600 Entry to write off bad A/R Accounts receivable later recovered (after write-off but before year end) 16,700 Dr Accounts Receivable 16,700 Cr Allowance for Doubtful Accounts 16,700 To reestablish accounts written off Dr Cash 16,700 Cr Accounts Receivable 16,700 To collect cash on accounts Since you are given the Dec. 31 A/R balance, you can ignore the entries for accounts receivable. However you will need the entries for Allowance for Doubtful Accounts for later on. At the end of the year, uncollectible accounts were estimated to total $107,100 based on an aging schedule. What amount of bad debts expense will Zeus record if Allowance for Doubtful Accounts has an opening credit balance of $42,100 on January 1? 42,100 - 95,600 + 16,700 = ($36,800) debit balance for Allowance for Doubtful Accounts on Dec. 31. 107,100 + 36,800 debit balance = $143,900 bad debt expense If the Allowance account had a credit balance, you would subtract instead of add it to the amount estimated to be uncollectible
How much is bad debt expense?
$9,000 * .01 = $90 1,000 * .10 = $100 Your calculation of doubtful accounts is correct. But the allowance account has already has a credit balance of $1,000. The problem would make sense if the credit balance was $100. Then the answer would be $90 because you are estimating what should be in the allowance account, which determines the bad debts expense. There are two approaches to estimating bad debts expense. With the income statement approach, bad debts expense is estimated as a percentage of credit sales. The journal entry is dr...Bad debts expense . . . cr.. . . . . . .Allowance for bad debts The expense is calculated and the allowance account is credited regardless of the balance it already contains. The balance sheet approach to estimating bad debts is to estimate the amount of receivables that will not be collected. This can be done by an aging method, as in your problem, or simply as a percentage of receivables. In this case you are calculating the amount that should be the ending balance in the Allowance for bad debts account. Consequently, what is already in the account has an effect on the way the journal entry is prepared. You calculate the allowance for bad debts should be $190. If the credit balance is already $100, in that case the entry to record bad debts expense is dr.. Bad debts expense . . . 90 cr. . . . . . .Allowance for bad debts. . .90 This is because the allowance account already has a 100 credit balance. If the allowance account has a $100 debit balance, the adjusting entry would be dr.. Bad debts expense . . . 290 cr. . . . . . .Allowance for bad debts. . .290 With a credit balance of $1,000 in the allowance account, previous estimates were way off. I suspect there is a typo in what you presented. .
How to find bad debt expense?
June 12, 2012 Provide services to customers on account for $36,500. Dr Accounts Receivable 36,500 Cr Service Fees 36,500 September 17, 2012 Receive $10,000 from customers on account. Dr Cash 10,000 Cr Accounts Receivable 10,000 December 31, 2012 Estimate that 35% of accounts receivable at the end of the year will not be received. A/R balance is 26,500 26,500 x 35% = 9,275 At this time, there is no debit or credit balance in Allowance for Doubtful Accounts, so 9,275 will be your adjustment. Dr Bad Debt Expense 9,275 Cr Allowance for Doubtful Accounts 9,275 March 4, 2013 Provide services to customers on account for $63,000. Dr Accounts Receivable 63,000 Cr Service Fees 63,000 May 20, 2013 Receive $19,250 from customers for services provided in 2012. Dr Cash 19,250 Cr Accounts Receivable 19,250 July 2, 2013 Write off the remaining amounts owed from services provided in 2012. 26,500 - 19,250 = 7,250 A/R remaining from 2012 Dr Allowance for Doubtful Accounts 7,250 Cr Accounts Receivable 7,250 October 19, 2013 Receive $17,000 from customers for services provided on account in 2013. Dr Cash 17,000 Cr Accounts Receivable 17,000 December 31, 2013 Estimate that 40% of accounts receivable at the end of the year will not be received. 63,000 - 17,000 = $46,000 current A/R balance 46,000 x 40% = $18,400 this is what the CREDIT balance in the Allowance account should be AFTER the adjustment. 9,275 - 7,250 = 2,025 current credit balance in the Allowance account 18,400 - 2,025 = 16,375 amount of adjustment Dr Bad Debt Expense 16,375 Cr Allowance for Doubtful Accounts 16,375
How do you calculate bad debt expense?
When sales transactions are recorded, a related amount of bad debt expense is also recorded, on the theory that the approximate amount of bad debt can be determined based on historical outcomes. This is recorded as a debit to the bad debt expense account, and a credit to the allowance for doubtful accounts.
Accounting: Compute bad debt expense?
Please help explain how to compute this bad debt expense. The book gives the answer but doesn't give much explanation how it got there. Thank you. Sales on account for the period totaled $500,000. The allowance for bad debts account had a balance at the beginning of the year of $14,500. Accounts Receivable written off as uncollectible during the year totaled $12,300. Compute bad debt expense for the following: 1) an aging accounts receivables estimates that $16,000 will prove uncollectible.
Bad debt expense - accounting....?!?
Frederick Company uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $275,000, (2) up to 120 days past due, $50,000, and (3) more than 120 days past due, $20,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectability is (1) 3.5 percent, (2) 10 percent, and (3) 30 percent, respectively. At December 31, 2012 (end of the current year), the Allowance for Doubtful Accounts balance is $400 (credit) before the end-of-period adjusting entry is made. How much is the bad debt expense? what about accounts receivable? and less allowance for doubtful account? How do I calculate these answers? thanks:)
How to find bad debt expense? ACCOUNTING HELP?
(a) Prepare the entry to record bad debt expense for the period. Dr Bad Debt Expense 20,200 Cr Allowance for Doubtful Accounts 20,200 Beginning Balance 9,000 - Write off 7,300 + Recovery 3,100 + Bad Debts 20,200 = Ending balance 25,000 (b) Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts. Accounts Receivable Beginning balance $200,000 | Collections 763,000 Sales 800,000 | Write-off 7,300 Recovery 3,100 | Collection 3,100 End Bal. 229,700 Allowance for Doubtful Accounts ....... ........ .....|Beg.Bal. 9,000 Write-off 7,300 | Recovery 3,100 ........ ..... ........| Bad Debts 20,200 (c) The net realizable value of the receivables at the end of the period Net realizable value of receivables is $229,700 – $25,000 =$204,700
Bad debt expense - accounting....?!?
Frederick Company uses the aging approach to estimate bad debt expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $275,000, (2) up to 120 days past due, $50,000, and (3) more than 120 days past due, $20,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectability is (1) 3.5 percent, (2) 10 percent, and (3) 30 percent, respectively. At December 31, 2012 (end of the current year), the Allowance for Doubtful Accounts balance is $400 (credit) before the end-of-period adjusting entry is made. How much is the bad debt expense? what about accounts receivable? and less allowance for doubtful account? How do I calculate these answers? thanks:)
Entries for bad debt expense under the direct write-off and allowance methods. Need Help Please.?
I need help only on problem C. Im thinking its 33,000 but I think I am wrong. Thank you in advance. Entries for Bad Debt Expense Under the Direct Write-Off Method and Allowance Method Spangler Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2012: Customer Amount Will Boyette $8,100 Stan Frey 7,500 Tammy Imes 10,300 Shana Wagner 1,900 Total 27,800 A. Journalize the write-offs for 2012 under the direct write-off method. If an amount box does not require an entry, leave it blank. B. Journalize the write-offs for 2012 under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $2,640,000 of credit sales during 2012. Based on past history and industry averages, 1 1/4% of credit sales are expected to be uncollectible. If an amount box does not require an entry, leave it blank. C. How much higher (lower) would Spangler Company's 2012 net income have been under the direct write-off method than under the allowance method?
Accounting Help Please! Bad Debt Expense.?
Assume that Simple Co. had credit sales of $247,000 and cost of goods sold of $147,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $2,700. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $220. What amount of Bad Debt Expense would the company record as an end-of-period adjustment? Bad Debt Expense: ?