In: Accounting
At December 31 of the current year, Vulcan Company had a balance of $728,000 in its Accounts Receivable account and a credit balance of $6,000 in the Allowance for Doubtful Accounts. The company has aged its accounts as follows:
Current |
$592,000 |
0-60 days past due |
64,000 |
61-180 days past due |
48,000 |
Over 180 days past due |
24,000 |
$728,000 |
In the past, the company has experienced losses as follows: 1% of current balances, 5% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 30% of balances over 180 days past due. The company bases its bad debts expense on the aging analysis.
Required:
Days Account Outstanding | % uncollectiable | Uncollectible | |
Current | 592,000.00 | 1% | 5,920.00 |
0-60 | 64,000.00 | 5% | 3,200.00 |
61-180 | 48,000.00 | 15% | 7,200.00 |
More than 180 days | 24,000.00 | 30% | 7,200.00 |
728,000.00 | 23,520.00 |
a)
Debit | Credit |
Bad Debt Expense | 17,520.00 | |
Allowance for Doubtful Accounts | 17,520.00 |
b)
Accounts Receivable | 728,000.00 |
Less: Allowance for doubtful Accounts | - 23,520.00 |
Total Accounts Receivable | 704,480.00 |
c.
Debit | Credit |
Allowance for doubtful Accounts | 1,385.00 | |
Accounts Receivable- Moon | 1,385.00 |
d.
Debit | Credit | |
Accounts Receivable- Moon | 1,385.00 | |
Allowance for doubtful Accounts | 1,385.00 | |
Cash | 1,385.00 | |
Accounts Receivable- Moon | 1,385.00 |