Question

Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. Accounts not yet due = $180,000; estimated uncollectible = 10%. Accounts 1–45 days past due = $25,000; estimated uncollectible = 20%. Accounts more than 45 days past due = $10,000; estimated uncollectible = 30%. Before recording any adjustments, Dhaliwal has a debit balance of $45,000 in its allowance for uncollectible accounts. Required: 1. Estimate the appropriate 12/31/2021 balance for Dhaliwal’s allowance for uncollectible accounts. 2. What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts?

Answer 1

Answer:

1.

Estimating the balance for allowance for uncollectible accounts on 12/31/2021 is $26,000

Explanation:

1.

Estimating the balance for allowance for uncollectible accounts on 12/31/2021:

Not yet due

Estimated amount uncollectible = Amount of Account Receivable × Estimate % uncollectible

= $180,000 × 10%

= $18,000

1- 45 days

Estimated amount uncollectible = Amount of Account Receivable × Estimate % uncollectible

= $25,000 × 20%

= $5,000

Over 45 days

Estimated amount uncollectible = Amount of Account Receivable × Estimate % uncollectible

= $10,000 × 30%

= $3,000

Total estimated amount in Allowance for doubtful debt (Credit balance) = $18,000 + $5,000 + $3,000

= $26,000

2.

The journal entry for adjusting the allowance for uncollectible accounts is shown below:

December 31, 2021    

Bad debt expense A/c............................................Dr    $71,000

             Allowance for doubtful accounts A/c........Cr    $71,000

Working Note:

Bad debt expense for the present year = Total estimated amount in Allowance for doubtful debt (Credit balance) + Current balance in Allowance for doubtful debt (Debit balance)

= $26,000 + $45,000

= $71,000

Answer 2

Answer:

Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due $285,000; estimated uncollectible 5 % . 2. Accounts 1-45 days past due $39,600; estimated uncollectible 10 % 3. Accounts more than 45 days past due $15,800; estimated uncollectible 15 % Before recording any adjustments, Dhaliwal has a debit balance of $71,100 in its allowance for uncollectible accounts. Required: 1. Estimate the appropriate 12/31/2021 balance for Dhaliwal's allowance for uncollectible accounts. 2. What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts? Required 1 Required 2 Estimate the appropriate 12/31/2021 balance for Dhaliwal's allowance for uncollectible accounts. Balance in allowance for uncollectible accounts Required 2

Dhallwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due $285,000; estimated uncollectible 5 %. 2. Accounts 1-45 days past due $39,600; estimated uncollectible 10 %. 3. Accounts more than 45 days past due $15,800; estimated uncollectible 15 % Before recording any adjustments, Dhaliwal has a debit balance of $71,100 in its allowance for uncollectible accounts. Required: 1. Estimate the appropriate 12/31/2021 balance for Dhalwal's allowance for uncollectible accounts. 2. What journal entry should Dhallwal record to adjust its allowance for uncollectible accounts? Required 1| Required 2 What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts? (If no entry is required for a transaction/event, select "No jounal entry required" in the first account field.) View transaction list Journal entry worksheet Record the adjustment to allowance for uncollectible accounts. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal