Answered>Order 5666

Problem #2

–      Credit Sales terms:  2%/10 days and n/30 days on all accounts  

–      January 1, 2014 balance of Accounts Receivable was $39,500 with a credit balance of $15,000 in the Allowance for Doubtful Accounts.  

–      On July 5, 2014 an Accounts Receivable balance from a customer of 10,000 was determined to be uncollectable and was written off.  

–      The company determines bad debt expense based on an aging analysis based on 4 time periods at the end of the year.

–      Not yet due: 1%  (Outstanding Balance:  5,000)

–      Up to 6 months past due:  5% (Outstanding Balance:  30,000)

–      6 to 12 months past due:  20% (Outstanding Balance:  20,000)

–      Greater than 12 months past due:  50% (Outstanding Balance 8,000)

Required:

 Prepare journal entries for each transaction:

–      To record the July 5 Account Receivable balance

–      To record bad debt expense given the company using the Allowance for Doubtful Accounts