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Facial Cosmetics provides plastic surgery primarily to hide the appearance of unwanted scars and other blemishes. During 2021, the company provides services of $402,000 on account. Of this amount, $52,000 remains uncollected at the end of the year. An aging schedule as of December 31, 2021, is provided below.
Age Group Amount Estimated Percent
Receivable Uncollectible
Not yet due $ 32,000 4 %
0-30 days past due 10,200 6 %
31–60 days past due 7,200 12 %
More than 60 days past due 2,600 30 %
Total $ 52,000
Required:
1. Calculate the allowance for uncollectible accounts.
2. Record the December 31, 2021, adjustment, assuming the balance of Allowance for Uncollectible Accounts before adjustment is $400 (debit).
3. On April 3, 2022, a customer’s account balance of $500 is written off as uncollectible. Record the write-off.
4. On July 17, 2022, the customer whose account was written off in requirement 3 unexpectedly pays $100 of the amount but does not expect to pay any additional amounts. Record the cash collection.

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tutorAnne

Answer: Please see explanation for answers

Explanation:

Age Group            Amount           Estimated Percent     Estimated  Amount

                              Receivable      Uncollectible                 Uncollectible

Not yet due             $ 32,000              4 %                          $1,280

0-30 days past due 10,200                 6 %                          $612  

31–60 days past due 7,200                 12 %                        $864

More than 60 days past due 2,600      30 %                      $780

Total                                  $ 52,000                                    $3536

Calculation

1) Estimated Amount Uncollectible = Amount Receivable x Estimated Percent      Uncollectible    =

4% x 32,000= $1,280

6% x 10,200=$612

12% x 7,200=$864

30% x2600=$780

Total = $3,536

The allowance for uncollectible accounts = $3,536

2) Journal to  Record the December 31, 2021, adjustment for a debit of $400

Estimated Amount Uncollectible =$3,536

Adjusted = $3536 + debit $400=$3,936

Date                   Account                  Debit             Credit

Dec 31, 2021,  Bad debts Expense    $3,936

Allowance for uncollectible accounts                    $3,936

3) Journal to  Record the write-off of $500

Date                   Account                              Debit             Credit

April 3, 2022,  Allowance for uncollectible

                             accounts                             $500

                         Accounts receivable                                     $500

4a)Journal to  reinstate  the account previously wrtten off  On July 17, 2022

Date                   Account                              Debit             Credit

July 17, 2022,   Accounts receivable             $100

Allowance for uncollectible  accounts                             $100

4b)Journal to record collection of cash  

Date                   Account                              Debit             Credit

July 17, 2022,   Cash                                    $100

     Accounts receivable                                                     $100

                                                                                                                   

A Journal Entry refers to simply a summary of the debits and also credits of the transaction entry to the Journal. When A Journal entries are important to the transaction because they allow us to sort our transactions into manageable data.

Age Group            Amount         Estimated Percent     Estimated  Amount

                            Receivable     Uncollectible                 Uncollectible

Not yet due             $ 32,000               4 %                          $1,280

0-30 days past due  10,200                   6 %                          $612  

31–60 days past due 7,200                  12 %                        $864

More than 60 days past due 2,600       30 %                      $780

                                                                                                             

Total                                 $ 52,000                                   $3536

The formula apply  Then we Estimated the Amount Uncollectible is =

Amount Receivable x Estimated Percent *Uncollectible   =

4% x 32,000=                 $1,280

6% x 10,200=                   $612

12% x 7,200=                   $864

30% x2600=                    $780

Then the Total is =          $3,536

The allowance for uncollectible accounts = $3,536

                                                                                                                       

Journal Entry

2) Journal to  Record the December 31, 2021, adjustment for a debit of $400

Estimated Amount Uncollectible =$3,536

Adjusted = $3536 + debit $400=$3,936

Date                   Account                  Debit             Credit

Dec 31, 2021,  Bad debts Expense    $3,936

Allowance for uncollectible accounts                    $3,936

                                                                                                         

3) Journal to  Record the write-off of $500

Date                   Account                             Debit            Credit

April 3, 2022,  Allowance for uncollectible

                            accounts                             $500

                        Accounts receivable                                     $500

4a)Journal to  reinstate  the account previously written off  On July 17, 2022

Date                   Account                              Debit             Credit

July 17, 2022,   Accounts receivable             $100

Allowance for uncollectible  accounts                            $100

                                                                                                                 

4b)Journal entry to the record collection of cash  

Date                   Account                              Debit             Credit

July 17, 2022,   Cash                                    $100

    Accounts receivable                                                     $100

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