JOURNAL ENTRIES FOR

UNCOLLECTIBLE ACCOUNTS

ALLOWANCE METHOD

Blocker Company estimates its uncollectible accounts based on an analysis of receivables.  On December 31, a junior accountant prepared the following aging schedule for the company’s $88,000 in outstanding receivables.  

                                                                                   Estimated

Uncollectible Accounts

Age Interval                                  Amount              %                Amount

Not due……………………..      $58,650               2%            $1,173

1-30 days past due…………        13,220               4%                 529

31-60 days past due………..          8,930              20%              1,786

61-90 days past due………..          4,000              30%              1,200

Over 90 days past due……..          3,200               50%              1,600

$88,000                                  $6,288

  The Allowance for Doubtful Accounts currently has a $210 debit balance.

1.    Prepare the adjusting entry to record the company’s estimate of uncollectible accounts.

2.    Prepare the journal entry to write off the following accounts:

T. Donaldson…………………………         $700

J. Kyle………………………………...           450

D. Mize………………………………..        1,000

3.    Prepare the journal entry to record receipt of $450 owed by J. Kyle.

4.    Write an answer to the following question: What circumstances would cause the Allowance for Doubtful Accounts to have a debit balance prior to adjustment?