Answer:
1. Dr Bad Debts Expense $187
Cr Allowance for Bad Debts $187
2. T- account
Credit side Allowance for Bad Debts $2,063
Credit side Balance $187
Credit side $2,250
Explanation:
1. Preparation of Surf and Sun's Journal entry to record bad debts expense for 2018
First step is to find the Estimated total uncollectible
Estimated total uncollectible
Age of Accounts Receivable
0 – 60 Days Over 60 Days Total Receivables
Accounts Receivable. $78,000 $3,000 $81,000
Percent uncollectible× 2%× 23%
Estimated total uncollectible $1,560 $690 $2,250
Second step is to prepare Surf and Sun Journal entry
Journal entry
Dec. 31 2018
Dr Bad Debts Expense $187
Cr Allowance for Bad Debts $187
($2,250 – $2,063)
2. Preparation of a T-account to compute the ending balance of Allowance for Bad Debts.
T- account
Credit side Allowance for Bad Debts $2,063 Unadjustment
Credit side Balance $187 Adjustment
Credit side $2,250 Balance
