P8-3A

At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts is a credit of
€9,200

Instructions

(a) Journalize and post the adjusting entry for bad debts at December 31, 2017

Dec 31 Bad Debt Expense €31,630

Allowance for Doubtful Accounts €31,630
(To adjust allowance account to total estimated
uncollectibles €40,830-9,200 = €31,630)

Bad Debt Expense Allowance for Doubtful Accounts

Dec.31 Adj. 31,630 Bal. 9,200
Dec. 31 Adj 31,630
Bal. 40,830

(b) Journalize and post to the allowance account the following events and transactions in the year
2018.

(1) On March 31, a €1,000 customer balance originating in 2017 is judged uncollectible.

(2) On May 31, a check for €1,000 is received from the customer whose account was written off as
uncollectible on March 31

March 31 Allowance for Doubtful Accounts €1,000

Accounts Receivable €1,000
May 31 Accounts Receivable 1,000
Allowance for Doubtful Accounts 1,000
31 Cash 1,000
Accounts Receivable 1,000
 Allowance for Doubtful Accounts
Bal. 9,200
Dec. 31 Adj 31,630
Bal. 40,830
2018
March 31 1,000 Bal. 39,830
May 31 1,000
Bal. 40,830

(c) Journalize the adjusting entry for bad debts on December 31, 2018, assuming that the
unadjusted balance in Allowance for Doubtful Accounts is a debit of €1,100 and the aging
schedule indicates that total estimated bad debts will be €31,600

Dec 31 Bad Debt Expense €32,700

Allowance for Doubtful Accounts €32,700
(To record estimate of uncollectible accounts
€31,600+1,100 = €32,700)