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Grana Inc. uses the Aging of Accounts Receivable method for estimating uncollectible accounts. The accounting records...

Grana Inc. uses the Aging of Accounts Receivable method for estimating uncollectible accounts. The accounting records show the following information at the end of the year:

Number of Days Unpaid

0 - 30

31 - 60

61 - 90

Over 90

Accounts Receivable

$370,000

$240,000

$110,000

$80,000

Estimated % Uncollectible

10%

15%

25%

5%

If the unadjusted credit balance in the Allowance for Doubtful Accounts account before is $15,000, what would be the amount of the adjustment for bad debts?

$45,000
$34,500
$79,000
$64,000

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Expert Solution

Option 4 $64,000
Grana Inc.
Number of Days Unpaid
0 - 30 31 - 60 61 - 90 Over 90 Totals
Accounts Receivable               370,000               240,000               110,000              80,000
Estimated % Uncollectible 5% 10% 15% 25%
Allowance for Doubtful Accounts                  18,500                  24,000                  16,500              20,000      79,000
Calculation =370,000*5% =240,000*10% =110,000*15% =80,000*25%
Allowance for Doubtful Accounts
Adjusted credit balance                  79,000 From above table
Unadjusted credit balance               (15,000)
Adjustment for bad debts                  64,000

ekkarill92 answered 2 years ago
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