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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 9, Problem 10E
Textbook Problem
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Using data in Exercise 9-9, assume that the allowance for doubtful accounts for Kirchhoff Industries has a credit balance of $10,112 before adjustment on August 31. Journalize the adjusting entry for uncollectible accounts as of August 31.

To determine

Journalize the adjusting entry for uncollectible as of August 31.

Explanation of Solution

Analysis of receivables method: A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts.

Due date: Due date is the maturity date on note/account, on due date the borrower is supposed to pay the debt.

Past due: Past due is the number of days of not receiving/making payment on the overdue account.

Journalize the adjusting entry for uncollectible as of August 31.

DateParticularsDebitCredit
August 31Bad debt expense $121,600 
Allowance for doubtful accounts $121,600
 (To adjust the uncollectible accounts)  

Table (1)

Working notes:

Calculate number of days past due for each account.

C Industries AccountPast due days
Number of days from March 23 to 319 days
Number of days from April 1 to 3131 days
Number of days from May 1 to 31 31 days
Number of days from June 1 to 3030 days
Number of days from July 1 to 3131 days
Number of days from August 1 to 31 31 days
Total162 days

Table (1)

K Company AccountPast due days
Number of days from July 2 to 3130 days
Number of days from August 1 to 31 31 days
Total61 days

Table (2)

MC Incorporation AccountPast due days
Number of days from July 26 to 316 days
Number of days from August 1 to 3131 days
Total37 days

Table (3)

S Company AutoPast due days
Number of days from August 4 to 31 28 days
Total28 days

Table (4)

Past due days has been calculated by omitting the due date but including the date of analysis of August 31.

Determine the number of days each account is past due as of August 31...

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Chapter 9 Solutions

Financial Accounting
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