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Daley Company prepared the following aging of receivables: Bad Debt Expense
Daley Company prepared the following aging of receivables analysis at December 31.
| Days Past Due | ||||||
Total | 0 | 1 to 30 | 31 to 60 | 61 to 90 | Over 90 | |
| Account receivables | 670000 | 416000 | 110000 | 56000 | 38000 | 50000 |
| % uncollectible | 3% | 4% | 7% | 9% | 12% | |
Requirements:
a. Complete the table below to calculate the estimated balance of Allowance for Doubtful Accounts using aging of accounts receivable.
b. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $5,600 credit.
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $2,100 debit.
Solutions
Expert Solution
Requirement [a]
Respective balances will be multiplied by the respective Uncollectuble % rate.
| Accounts receivables | % uncollectibles | Estimated Uncollectibles | ||
| [A] | [B] | [C = A x B] | ||
| Not due | $416,000 | 3.00% | $12,480 | |
| 1 to 30 | $110,000 | 4.00% | $4,400 | |
| 31 to 60 | $56,000 | 7.00% | $3,920 | |
| 61 to 90 | $38,000 | 9.00% | $3,420 | |
| Over 90 | $50,000 | 12.00% | $6,000 | |
| Estimated balance of Allowance account [Adjusted ending balance required] | $30,220 | Credit |
Requirement [b]
| Unadjusted balance in Allowance account | $5,600 | Credit | |
| Estimated balance of Allowance account [Adjusted ending balance required] | $30,220 | Credit | |
| Bad Debt Expense [or Uncollectible account expense] | $24,620 | $ 30220 credit required - $ 5600 credit existing |
Entry:
| Accounts title | Debit | Credit |
| Bad Debt Expense | $24,620 | |
| Allowance for Doubtful Accounts | $24,620 | |
| (to record adjustments for bad debts) |
Requirement [c]
| Unadjusted balance in Allowance account | $2,100 | Debit |
| Estimated balance of Allowance account [Adjusted ending balance required] | $30,220 | Credit |
| Bad Debt Expense [or Uncollectible account expense] | $32,320 | $ 30220 credit required + $2100 debit existing |
Entry:
| Accounts title | Debit | Credit |
| Bad Debt Expense | $32,320 | |
| Allowance for Doubtful Accounts | $32,320 | |
| (to record adjustments for bad debts) |
| Under Allowance method: |
| >Bad Debt Expense is recorded by debiting Bad Debt expense, and crediting the Allowance account, which increases Allowance account balance. |
Requirements asked:
[a]
| / | Accounts receivables | % uncollectibles | Estimated Uncollectibles | |
| Not due | $416,000 | 3.00% | $12,480 | |
| 1 to 30 | $110,000 | 4.00% | $4,400 | |
| 31 to 60 | $56,000 | 7.00% | $3,920 | |
| 61 to 90 | $38,000 | 9.00% | $3,420 | |
| Over 90 | $50,000 | 12.00% | $6,000 | |
| Estimated balance of Allowance account [Adjusted ending balance required] | $30,220 | Credit |
[b]
| Accounts title | Debit | Credit |
| Bad Debt Expense | $24,620 | |
| Allowance for Doubtful Accounts | $24,620 | |
| (to record adjustments for bad debts) |
[c]
| Accounts title | Debit | Credit |
| Bad Debt Expense | $32,320 | |
| Allowance for Doubtful Accounts | $32,320 | |
| (to record adjustments for bad debts) |
Syed Zargham Haider Rizvi answered 1 hour agoRelated Solutions
Daley Company prepared the following aging of receivables analysis at December 31.
Daley Company prepared the following aging of receivables analysis at December 31.
Days Past Due
Total
0
1 to 30
31 to 60
61 to 90
Over 90
Accounts receivable
$
615,000
$
405,000
$
99,000
$
45,000
$
27,000
$
39,000
Percent uncollectible
1
%
2
%
5
%
...
Daley Company prepared the following aging of receivables analysis at December 31. Days Past Due Total...
Daley Company prepared the following aging of receivables analysis
at December 31.
Days Past Due
Total
0
1 to 30
31 to 60
61 to 90
Over 90
Accounts receivable
$
590,000
$
400,000
$
94,000
$
40,000
$
22,000
$
34,000
Percent uncollectible
2
%
3
%
6
%
8
%
11
%
Exercise 7-8 Aging of receivables method LO P3
a. Complete the below table to calculate the estimated
balance of Allowance for Doubtful Accounts using aging of...
Daley Company prepared the following aging of receivables analysis at December 31. Days Past Due Total...
Daley Company prepared the following aging of receivables
analysis at December 31.
Days Past Due
Total
0
1 to 30
31 to 60
61 to 90
Over 90
Accounts receivable
$
580,000
$
398,000
$
92,000
$
38,000
$
20,000
$
32,000
Percent uncollectible
3
%
4
%
7
%
9
%
12
%
a. Complete a table to calculate the estimated
balance of Allowance for Doubtful Accounts using aging of accounts
receivable.
b. Prepare the adjusting entry to record...
Ch 7 E7-9, E7-10 Daley Company prepared the following aging of receivables analysis at December 31....
Ch 7 E7-9, E7-10
Daley Company prepared the following aging of receivables analysis
at December 31.
Days Past Due
Total
0
1
to 30
31
to 60
61
to 90
Over 90
Accounts receivable
$
570,000
$
396,000
$
90,000
$
36,000
$
18,000
$
30,000
Percent
uncollectible
1
%
2
%
5
%
7
%
10
%
a. Estimate the balance of the Allowance for
Doubtful Accounts assuming the company uses 4.5% of total accounts
receivable to estimate uncollectibles,...
How do the percent-of-receivables and aging-of-receivables methods compute bad debts expense?
How do the percent-of-receivables and aging-of-receivables methods
compute bad debts expense?
[The following information applies to the questions displayed below.] Daley Company prepared the following aging of...
[The following information applies to the questions
displayed below.]
Daley Company prepared the following aging of receivables analysis
at December 31.
Days Past Due
Total
0
1 to 30
31 to 60
61 to 90
Over 90
Accounts receivable
$
595,000
$
401,000
$
95,000
$
41,000
$
23,000
$
35,000
Percent uncollectible
3
%
4
%
7
%
9
%
12
%
Exercise 7-9 Percent of receivables method LO P3
a. Estimate the balance of the Allowance for
Doubtful...
[The following information applies to the questions displayed below.] Daley Company prepared the following aging of...
[The following information applies to the questions
displayed below.]
Daley Company prepared the following aging of receivables analysis
at December 31.
Days Past Due
Total
0
1 to 30
31 to 60
61 to 90
Over 90
Accounts receivable
$
595,000
$
401,000
$
95,000
$
41,000
$
23,000
$
35,000
Percent uncollectible
3
%
4
%
7
%
9
%
12
%
Exercise 7-8 Aging of receivables method LO P3
a. Complete the below table to calculate the estimated...
Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end...
Blue Skies Equipment Company uses the aging approach to estimate
bad debt expense at the end of each accounting year. Credit sales
occur frequently on terms n/60. The balance of each account
receivable is aged on the basis of three time periods as follows:
(1) not yet due, (2) up to one year past due, and (3) more than one
year past due. Experience has shown that for each age group, the
average loss rate on the amount of the...
Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end...
Blue Skies Equipment Company uses the aging approach to estimate
bad debt expense at the end of each accounting year. Credit sales
occur frequently on terms n/60. The balance of each account
receivable is aged on the basis of three time periods as follows:
(1) not yet due, (2) up to one year past due, and (3) more than one
year past due. Experience has shown that for each age group, the
average loss rate on the amount of the...
Penny Company uses the aging approach to estimate bad debt expense. The ending balance of each...
Penny Company uses the aging approach to estimate bad debt
expense. The ending balance of each account receivable is aged on
the basis of three time periods as follows: (1) not yet due,
$285,000; (2) up to 120 days past due, $50,000; and (3) more than
120 days past due, $21,000. Experience has shown that for each age
group, the average loss rate on the amount of the receivables at
year-end due to uncollectibility is (1) 2.5 percent, (2) 12...
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