Question

Using the Accounts Receivable Aging Schedule below, answer the following questions related to Christina’s Cookie Company:

Customer	Current Balance	1-30 days past due	31-60 days past due	61-90 past due	+90 days past due	Total
Smith	$100			$200		$300
Jones		$300	$800			$1,100
Brown	$800	$100		$800		$1,700
Edwards					$5,000	$5,000
Totals	$900	$400	$800	$1,000	$5,000	$8,100

Estimation of the allowance for doubtful accounts is based on the following rules:

Aging Category Probability AR will not be collected

Current 2%

1-30 days past due 4%

31-60 days past due 6%

61-90 days past due 10%

Over 90 days past due 25%

**Note, before any adjustments, the allowance for doubtful accounts has a current credit balance of $300.

Prepare the necessary journal entry to record bad debt expense for the current period.

_____________________________________

   ________________________________________

  

What is the final balance in the Allowance for Doubtful Accounts at the end of the period? $__________________________________

What is the Net Realizable Value of the accounts receivable for Christina’s Cookie Company at the end of the period?

$___________________________________

Answer 1

Age of account	Amount	Est.% Uncollectible	Estimated uncollectibles
1 to 30 days	400	4%	16
31 to 60 days	800	6%	48
61 to 90 days	1,000	10%	100
Over 90 days	5,000	25%	1250
Total	7,200		1,414

Allowance for doubtful accounts ending = $1,414

Allowance for doubtful accounts beginning = $300

Bad debt expense = Allowance for doubtful accounts ending - Allowance for doubtful accounts beginning

= 1,414-300

= $1,114

General Journal	Debit	Credit
Bad debt expense	$1,114
Allowance for doubtful accounts		$1,114
(to record bad debt expense for the current period)

The final balance in the Allowance for Doubtful Accounts at the end of the period = $1,414

Net realizable value of accounts receivable = Accounts receivable - Allowance for doubtful accounts ending

= 8,100-1,414

= $6,686

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!