Mephisto Inc Required: Calculate and Record the Journal Entry for Bad Debt

Essay

Mephisto Inc. generated $2.75 million in credit sales during the current year. The balance of the allowance for doubtful accounts at December 31 is $2,500 debit. Accounts receivable at December 31 consists of the following: $$\begin{array} { | l | r | r | } \hline \text { Account Classification } & \text { Amount } & \text { Estimated Percentage Uncollectible } \\\hline 1 - 30 \text { days } & \$ 350,000 & 1.5 \% \\\hline 31 - 60 \text { days } & 180,000 & 3 \% \\\hline 61 - 90 \text { days } & 55,000 & 5 \% \\\hline \text { Over } 90 \text { days } & 21,000 & 25 \% \\\hline\end{array}$$ Required: Calculate and record the journal entry for bad debt expense for the current year using the aging of accounts receivable approach. Mephisto has decided to write off $15, 000 of the accounts that were over 90 days old. Record the journal entry. What is the balance for Accounts R eceivable as shown on the December 31 balance sheet? One of the customers whose $2,200 account was written off paid in full. Record the journal entry . (entries) Is the balance in the allowance for doubtful accounts affected by the transaction in part d? If so , by how much? What is the new balance?