Question

In: Accounting

On December 31 an aging of receivables revealed the following Age in days Amount % Uncollectible...

On December 31 an aging of receivables revealed the following

Age in days Amount % Uncollectible

0-30 400,000 0.5%

31-60 100,000 1.5

61-90 60,000 10.0

91-120 20,000 50.0

Over 120 0                      99.0

The allowance for doubtful accounts has an unadjusted debit balance of $200.

Record the year end adjusting entry for uncollectible accounts.

Solutions

Expert Solution

Answer :

Year end adjusting entry for uncollectible accounts.

Debit.......Bad Debt Expense........$19,700

Credit....Allowance for doubtful accounts.....$19,700

Explanation:

Age in days   Amount  % Uncollectible Amount Uncollectible

0-30        400,000     0.5% 2,000

31-60        100,000      1.5% 1,500

61-90        60,000      10.0% 6,000

91-120      20,000       50.0% 10,000

Over 120    0                99.0% 0

Total 580,000 $19,500

Since allowance for doubtful accounts has an unadjusted debit balance of $200, we need to make an adjustment which makes the balance in this account as $19,500. Hence adjustment required = 19500+200 = $19,700


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