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Youmin has accounts receivable of $95,400 at march 31, 2021 (amounts in thousands). Credit terms are 2/10, n/30. At march 31, 2021, there is a $2,100 credit balance in allowance for doubtful accounts prior to adjustment. The company uses the percentageā€ofā€receivables basis for estimating uncollectible accounts. The company's estimates of bad debts are as shown below.

Answer :

Abiolataiwo2015go

Based on the information given bad debt expense is $8,675 and the journal entry is: Debit Bad debt  $6,575; Credit Allowance for Doubtful Account $6,575.

a. Bad debt expense:

Accounts Receivable   Amount       %          Estimated Uncollectible

Current                          $65,000         2%              $1,300

1ā€“30 days past due      $12,900          5%              $645

31ā€“90 days past due    $10,100          30%            $3,030

Over 90 days past due $7,400          50%            $3,700

Total                                                                         $8,675

b. Journal entry:

March 31 2021

Debit Bad debt  $6,575

Credit Allowance for Doubtful Account $6,575

($8,675-$2,100)

Inconclusion bad debt expense is $8,675 and the journal entry is: Debit Bad debt  $6,575; Credit Allowance for Doubtful Account $6,575.

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