Question

At December 31, 2019, Windsor, Inc. Company had a credit balance of $18,700 in Allowance for Doubtful Accounts. During 2020, Windsor, Inc. wrote off accounts totaling $12,200. One of those accounts ($3,400) was later collected. At December 31, 2020, an aging schedule indicated that the balance in Allowance for Doubtful Accounts should be $24,200. Prepare journal entries to record the 2020 transactions of Windsor, Inc. Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1. Allowance for Doubtful Accounts A/c Dr $12,200

          To Accounts receivable A/c $12,200

(Being the wrote off amount is recorded)

2. Accounts Receivable A/c Dr $3,400

        To  Allowance for Doubtful Accounts A/c Dr $3,400

(Being the reversal of entry is passed with collected amount)

3. Cash A/c Dr $3,400

       To Accounts Receivable A/c $3,400

(Being amount is collected)

4. Bad debt expense A/c Dr  $13,300

         To Allowance for doubtful debts  $13,300

(Being bad debt expense is recorded)

The computation of the bad debt expense is shown below:

Ending balance of Allowance for Uncollectible Accounts = Beginning balance of Allowance for Uncollectible Accounts + bad debts - write off amount + collected amount

$24,200 = $19,700 + bad debts - $12,200 + 3,400

$24,200 = $10,900 + bad debts

So, the bad debt expense would be

= $24,200 - $10,900

= $13,300