Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2021, accounts receivable totaled $665,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $40,000 at the beginning of 2021 and $25,000 in receivables were written off during the year as uncollectible. Also, $2,000 in cash was received in December from a customer whose account previously had been written off. The company estimates bad debts by applying a percentage of 15% to accounts receivable at the end of the year. Required:
Prepare journal entries to record the write-off of receivables, the collection of $2,000 for previously written off receivables, and the year-end adjusting entry for bad debt expense.

Bad debt expenses is $82,750

Explanation:

Recording the write off receivables

Date  Account Titles and Explanation                 Debit       Credit

          Allowances for uncollectible accounts   $25,000

               Accounts receivables                                              $25,000

           (To write off an uncollectible amount)

Recording the reinstatement of an account previously written off

Date  Account Titles and Explanation                 Debit       Credit

          Account receivables                                  $2,000

                 Allowances for uncollectible accounts               $2,000

          (To reinstatement of an account previously written off)

Recording collection of account previously written off

Date  Account Titles and Explanation                 Debit       Credit

          Cash                                                               $2,000

                           Account receivables                                  $2,000

          (To record the cash received)

Recording bad debt expenses for the year

Date  Account Titles and Explanation                 Debit       Credit

          Bad debt Expenses                                   $82,750

                Allowances for doubtful accounts                        $82,750

           (To record estimated bad debts)

Workings

Particulars                        Amount

Beginning balance                    $40,000

Less: Receivables write off       $25,000

Add: Collection of receivables  $2,000

        previously written off

                                                     $17,000

Less: Required allowances         $99,750 ($665,000*15%)                  

Bad debt expenses                     $82,750

Thus, the bad debt expenses is $82,750

forbearance of student loan payments. under forbearance, your loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. if you don't pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance.

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