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Chapter 2
Accounting for Receivables
AP-4A (
2
)
On July 31, 2016, Alou Company’s accounts receivable ledger showed an ending balance of
$50,000. The company estimates that $2,500 of accounts receivable will become uncollectible.
Prepare a journal entry to record estimation of bad debt.
Date
Account Title and Explanation
Debit
Credit
AP-5A (
2
3
)
D&D Company uses the allowance method to account for uncollectible receivables. During
2016, the company made total credit sales of $1,370,000, of which $328,000 was currently
owed by customers at year-end. According to the company’s historical sales, 2.5% of total
credit sales will be uncollected. D&D Company uses an income statement approach to
estimate the amount of uncollectible receivables. The company’s year-end is December 31.
Prepare the journal entry to account for the amount deemed uncollectible.
Date
Account Title and Explanation
Debit
Credit
