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Entry for Uncollectible Accounts
Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are given below.
Estimated Uncollectible Estimated Uncollectible
Age Interval Balance Accounts Percent Accounts Amount
Not past due $780,000 1/2% $3,900
1-30 days past due 85,800 2 1,716
31-60 days past due 39,000 9 3,510
61-90 days past due 28,100 16 4,496
91-180 days past due 20,300 41 8,323
Over 180 days past due 14,800 65 9,620
Total $968,000 $31,565
Assume that the allowance for doubtful accounts for Outlaw Bike Co. had a debit balance of $5,680 as of December 31. Journalize the adjusting entry for uncollectible accounts as of December 31.

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Tundexi

Answer:

Date     Account title and Explanation          Debit       Credit

31 Dec  Bad Debts Expense                           $37,245

                    Allowance for doubtful debts                     $37,245

                    ($31,565 + $5,680)

             (To record the adjustment entry)

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