Quiz 6: P6: Aging Accounts Receivable Aging
Open the file listed. In this problem, we will be recording transactions for accounts receivable using the allowance method. The unedited file will look like this:
In the open file, input the formulas in the cells indicated using cell references when appropriate. Use a formula to calculate the total amount and total uncollectible. When you are finished inputting all the formulas, your spreadsheet should look like this:
When an accounts receivable is written off as uncollectible, an adjusting entry must be made. The adjusting entries will be made according to the following circumstances. a. The Allowance for Doubtful Accounts has a credit balance of $500. For this entry, Bad Debt Expense will be debited for $960 ($1,460 - $500) and Allowance for Doubtful Accounts will be credit for $960. A balance of $500 is already there in the account and according to the calculations on the worksheet; a balance of $1,460 is required. b. The Allowance for Doubtful Account has a debit balance of $250. For this entry Bad Debt Expense will be debited for $1,710 ($1,460 + $250) and Allowance for Doubtful Accounts will be credited with the same amount. There is a debit balance, but according to the calculations of worksheet, a credit balance of $1,460 is required. c. October's credit sales were $70,000 and uncollectible accounts expense is estimated @ 2% of sales. Bad Debt Expense will be debited for $1,400 (2% of $70,000) and Allowance for Doubtful Accounts will be credited for the same amount.