Answer :
Journal entry: Debit: Allowance for Doubtful Accounts - $58,100; Credit: Accounts Receivable - $58,100.
To write off customer Slo's long-overdue account, we need to update the Accounts Receivable and Allowance for Doubtful Accounts (AFDA) balances.
First, let's calculate the total balance of Slo's account at the end of 20X5. We start with the opening balance of $60,000 and subtract the uncollectible amount of $1,900, giving us $58,100.
Next, we need to adjust the AFDA balance. The AFDA is estimated based on the ending balance of accounts receivable, which is $31,000. We multiply this by the estimated bad debt loss rate of 8% to get $2,480.
Now, we can update the AFDA balance. We start with the opening balance of $4,800 and add the estimated bad debt loss of $2,480, giving us a new AFDA balance of $7,280.
Finally, we can write off Slo's account. We debit AFDA for $58,100 (Slo's account balance) and credit Accounts Receivable for the same amount. This reduces the accounts receivable balance and reflects the write-off of Slo's account.
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