Question

In: Accounting

a. The aging of Torme Designs' accounts receivable is shown below. Calculate the amount of each...

a. The aging of Torme Designs' accounts receivable is shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible. If required, round your answers to two decimal places.

Estimated Uncollectible Accts
Age Interval Balance Percentage Amount
Not past due $850,000 3.50%   $
1-30 days past due 47,500 5.00  
31-60 days past due 21,750 10.00  
61-90 days past due 11,250 20.00  
91-180 days past due 5,065 30.00  
181-365 days past due 2,500 50.00  
Over 365 days past due 1,145 95.00  
Total $939,210 $

b. If Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry for the bad debt expense for the year. Round your answers to two decimal places.

Dec. 31

Solutions

Expert Solution

a.)

Amt. in $
Age Interval Estimated Uncollectible Accts Balance (A) Percentage (B) Uncollectible amount (A*B)
Not past due                      8,50,000 3.50%                            29,750.00
1-30 days past due                        47,500 5.00%                              2,375.00
31-60 days past due                        21,750 10.00%                              2,175.00
61-90 days past due                        11,250 20.00%                              2,250.00
91-180 days past due                          5,065 30.00%                              1,519.50
181-365 days past due                          2,500 50.00%                              1,250.00
Over 365 days past due                          1,145 95.00%                              1,087.75
Total                      9,39,210                            40,407.25

b.)  Adjusting entry for recording the bad debt expense for the year:-

Bad debt expense A/c........Dr. 39272.25 (40407.25-1135)

To Allowance for doubtful debt A/c 39272.25

(Being bad debt expense recorded for the year)


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