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2 June, 20:36

Oakley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.

Days Past Due

Total 0 1 to 30 31 to 60 61 to 90 Over 90

Accounts receivable $570,000 $396,00 $90,000 $36,000 $18,000 $30,000

Percent uncollectible 1% 2% 5% 7% 10%

A) On February 1 of the next period, the company determined that $6,800 in customer accounts was uncollectible; specifically, $900 for Oakley Co. and $5,900 for Brookes Co. Prepare the journal entry to write off those two accounts.

B) On June 5 of that next period, the company unexpectedly received a $900 payment on a customer account, Oakley Company, that had previously been written off in part a.

Required:

Prepare the entries necessary to reinstate the account and to record the cash received.

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Answers (1)
  1. 2 June, 20:53
    0
    the answers are given below;

    Explanation:

    A) February 1,

    Bad Debt Expense Dr.$6,800

    A/R-Oakley Co. Cr.$900

    A/R-Brookes Co. Cr.$5,900

    B) June 5,

    A/R-Oakley Co. Dr.$900

    Bad Debt Expense/Retained Earnings Cr.$900

    Cash Dr.$900

    A/R-Oakley Cr.$900
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