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Daley Company prepared the following aging of receivables analysis at December 31. Days Past Due Total...


Daley Company prepared the following aging of receivables analysis at December 31.

Days Past Due
Total 0 1 to 30 31 to 60 61 to 90 Over 90
Accounts receivable $ 590,000 $ 400,000 $ 94,000 $ 40,000 $ 22,000 $ 34,000
Percent uncollectible 2 % 3 % 6 % 8 % 11 %

Exercise 7-8 Aging of receivables method LO P3


a.
Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using aging of accounts receivable.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $4,000 credit.
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $500 debit.

Solutions

Expert Solution

a.

Total Age of account
0 1 to 30 days 31 to 60 days 61 to 90 days Over 90 days
Accounts receivable 590,000 400,000 94,000 40,000 22,000 34,000
Estimated Percentage Uncollectible 2.0% 3.0% 6.0% 8.0% 11.0%
Total estimated uncollectibles 18,720 8,000 2,820 2,400 1,760 3,740

b.

Allowance for doubtful accounts, existing = $4,000

Allowance for doubtful accounts, ending = $18,720

Bad debt expense =  Allowance for doubtful accounts, ending - Allowance for doubtful accounts, existing

= 18,720-4,000

= $14,720

General Journal Debit Credit
Bad debt expense $14,720
Allowance for doubtful accounts $14,720
( To record bad debt expense)

c.

Allowance for doubtful accounts, existing = $500 (Debit)

Allowance for doubtful accounts, ending = $18,720

Bad debt expense =  Allowance for doubtful accounts, ending - Allowance for doubtful accounts, existing

= 18,720+500

= $19,220

General Journal Debit Credit
Bad debt expense $19,220
Allowance for doubtful accounts $19,220
( To record bad debt expense)

Kindly comment if you need further assistance. Thanks‼!


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