10/31/2017 Exercise 229

Exercise 229
The Garvey Sign Company uses the allowance method in accounting for uncollectible accounts. Past
experience indicates that 6% of accounts receivable will eventually be uncollectible. Selected
account balances at December 31, 2016, and December 31, 2017, appear below:

12/31/2016 12/31/2017
Net Credit Sales $400,000 $500,000
Accounts Receivable 80,000 100,000
Allowance for Doubtful Accounts 4,000 ?

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Record the following events in 2017. (Credit account titles are automatically indented when
the amount is entered. Do not indent manually.)

Aug. 10 Determined that the account of Kurt West for $900 is uncollectible.
Sept. 12 Determined that the account of Jill Lynch for $3,000 is uncollectible.
Oct. 10 Received a check for $300 as payment on account from Kurt West, whose account had
previously been written off as uncollectible.

Date Account Titles and Explanation Debit Credit

Aug. 10 Allowance for Doubtful Accounts 900

Accounts Receivable 900

Sept. 12 Allowance for Doubtful Accounts 3000

Accounts Receivable 3000

Oct. 10 Accounts Receivable 300

Allowance for Doubtful Accounts 300

(To reinstate Kurt West account previously written off)

Cash 600

Accounts Receivable

(To record collection)

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Prepare the adjusting journal entry to record the bad debt provision for the year ended December
31, 2017. (Credit account titles are automatically indented when the amount is entered. Do
not indent manually.)

Date Account Titles and Explanation Debit Credit

Dec. 31 Bad Debt Expense 5000

Allowance for Doubtful Accounts 5000

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10/31/2017 Exercise 229

What is the balance of Allowance for Doubtful Accounts at December 31, 2017?

Balance of allowance for Doubtful Accounts at December 31, 2017 8200

$

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