Sample Problem:

19A was the first year that Ranger Co. was in business. These are the balances in the A/R account from
the General Ledger and the Allowance Account before any adjusting entries had been made (the details
of the A/R from the subsidiary ledger is also displayed):

Accounts Receivable Allowance For Doubtful Accounts

12/31/9A 60,000 12/31/A 3,000
1/15/B 1,000
2/15/B 2,500
9/18/B 1,000
Balance 12/31/B before Adj. 500
Allen Sales
12/01/9A 2,000 12/31/9A 350,000
12/23/9A 6,000
8,000

Baker Schedule of A/R - 12/31/9A

09/15/9A 9,000 Allen 8,000
12/10/9A 10,000 Baker 19,000
19,000 Cobb 28,000
Davis 5,000
Total 60,000
Cobb
08/18/9A 1,000 Aging of A/R:
11/27/9A 12,000 Not 1-30 Days 31-60 Days 61-90 Days
12/15/9A 15,000 Customer Total Due Past Due Past Due Past Due
28,000 Allen 8,000 8,000
Baker 19,000 10,000 9,000
Davis Cobb 28,000 15,000 12,000
10/03/9A 5,000 Davis 5,000 5,000
Total 60,000 33,000 12,000 5,000 9,000
Est. % Uncollectible 3% 5% 7% 10%
Est. Amt. Uncollect. 3,000 990 600 350 900
Record the following selected transactions (post all debits & credits that affect
the Allowance for Doubtful Accounts account):

12/31/9A Record the adjusting entry for the uncollectible accounts for the period based on
the aging of A/R method of estimation.

01/15/9B Due to missing paperwork, wrote off the 08/18 invoice owed by Cobb.

02/15/9B Davis is bankrupt. They paid 1/2 of the amount they owed & the remainder was written off.

09/18/9B Located the missing paperwork which caused the Cobb write-off. Reinstated the amount
written off & recorded the full collection from Cobb.

12/31/9B Based on Aging the A/R at the end of 199B, it was estimated that $4,000 of A/R would
be uncollectible. Record the adjusting entry.
Date Accounts & Explanation Debit Credit
12/31/A Bad Debts Expense 3,000
Allowance for D/A 3,000

1/15/B Allowance for D/A 1,000

A/R - Cobb 1,000

2/15/B Cash 2,500

Allowance for D/A 2,500
A/R - Davis 5,000

9/18/B A/R - Cobb 1,000

Allowance for D/A 1,000

9/18/B Cash 1,000

A/R - Cobb 1,000

12/31/B Bad Debts Expense 3,500

Allowance for D/A 3,500
Over 90 Days
Past Due

1,000

1,000
16%
160