In: Accounting
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.
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‼!