Questions: Entry for uncollectible accounts Outlaw Bike Co. Is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31 and a historical analysis of uncollectible accounts in each age category are given below. Age Interval Balance Estimated Uncollectible Accounts Percent Estimated Uncollectible Accounts Amount Not past due 620,000 1/2% 3,100 1-30 days past due 68,200 3% 2,046 31-60 days past due 31,000 8% 2,480 61-90 days past due 22,300 16% 3,568 91-180 days past due 16,100 39% 6,279 Over 180 days past due 11,800 80% 9,440 Total 769,400 26,913 Assume that the allowance for doubtful accounts for Outlaw Bike Co. had a debit balance of 4,845 as of December 31. Journalize the adjusting entry for uncollectible accounts as of December 31. If an amount box does not require an entry, leave it blank.

Solution Steps

To solve the problem of journalizing the adjusting entry for uncollectible accounts, we need to calculate the total estimated uncollectible accounts and adjust for the existing balance in the allowance for doubtful accounts. The steps are as follows:

1. Calculate the total estimated uncollectible accounts from the aging schedule.
2. Determine the required adjustment by subtracting the existing debit balance in the allowance for doubtful accounts from the total estimated uncollectible accounts.
3. Prepare the journal entry to adjust the allowance for doubtful accounts.

From the aging schedule, the total estimated uncollectible accounts is given as: \[ \text{Total Estimated Uncollectible Accounts} = 26913 \]

The existing debit balance in the allowance for doubtful accounts is: \[ \text{Existing Debit Balance} = 4845 \]

To find the required adjustment, we subtract the existing debit balance from the total estimated uncollectible accounts: \[ \text{Required Adjustment} = \text{Total Estimated Uncollectible Accounts} - \text{Existing Debit Balance} = 26913 - 4845 = 22068 \]

The journal entry to adjust the allowance for doubtful accounts is as follows:

• Date: \( \text{Dec. 31} \)
• Debit: \( \text{Bad Debt Expense} \)
• Credit: \( \text{Allowance for Doubtful Accounts} \)
• Amount: \( 22068 \)

Final Answer