Question

Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31:
Customer Amount
Kim Abel $21,550
Lee Drake 33,925
Jenny Green 27,565
Mike Lamb 19,460
Total $102,500

The company prepared the following aging schedule for its accounts receivable on December 31:
Aging Class (Number of Days Past Due) Receivables Balance on December 31 Estimated Percent of Uncollectible Accounts
0-30 days $715,000 1%
31-60 days 310,000 2
61-90 days 102,000 15
91-120 fays 97,000 30
More than 120 days 60
Total receivables $1,300,000

A. Journalize the write-offs under the direct write-off method. I

Answer 1

Answer:

Bad debt expense $102,500

        To Account receivable - kim Abel $21,550

        To Account receivable - Lee Drake $33,925

        To Account receivable - Jenny Green $27,565

        To Account receivable - Mike Lamb $19,460

(Being the written off amount is recorded)

Explanation:

The journal entry is shown below:

Bad debt expense $102,500

        To Account receivable - kim Abel $21,550

        To Account receivable - Lee Drake $33,925

        To Account receivable - Jenny Green $27,565

        To Account receivable - Mike Lamb $19,460

(Being the written off amount is recorded)

For recording this we debited the bad debt expense as it increased the expenses while at the same time it reduced the assets, so account receivable is credited