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In: Accounting

Splish Brothers Inc. uses the allowance method of accounting for bad debts. The company produced the...

Splish Brothers Inc. uses the allowance method of accounting for bad debts. The company produced the following aging of the accounts receivable at year-end.

(a)- ANSWERED- SCROLL TO QUESTION B

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Calculate the total estimated bad debts based on the information below.

Number of Days Outstanding

Total

0–30

31–60

61–90

91–120

Over 120

Accounts receivable

$538,000 $374,000 $88,000 $40,000 $24,000 $12,000

% uncollectible

1% 4% 5% 7% 11%

Estimated bad debts

$enter estimated bad debts in dollars

$enter estimated bad debts in dollars

$enter estimated bad debts in dollars

$enter estimated bad debts in dollars

$enter estimated bad debts in dollars

$enter estimated bad debts in dollars

B. Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined above. Assume the unadjusted balance in Allowance for Doubtful Accounts is a $3,800 debit. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Solutions

Expert Solution

Number of Days Outstanding
Total 0–30 31–60 61–90 91–120 Over 120
Accounts receivable        538,000        374,000        88,000        40,000        24,000        12,000
% uncollectible 1% 4% 5% 7% 11%
Estimated bad debts          12,260             3,740           3,520           2,000           1,680          1,320
Accounts NAME Debit Credit
Bad debt Expense                  16,060 (12260 + 3800)
         Allowance for doubtful accounts                  16,060
(To record bad debt expense)

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