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Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance...

Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts.

  1. Accounts not yet due = $170,000; estimated uncollectible = 10%.
  2. Accounts 1–45 days past due = $23,600; estimated uncollectible = 15%.
  3. Accounts more than 45 days past due = $9,400; estimated uncollectible = 20%.

Before recording any adjustments, Dhaliwal has a debit balance of $42,300 in its allowance for uncollectible accounts.

Required:
1. Estimate the appropriate 12/31/2021 balance for Dhaliwal’s allowance for uncollectible accounts.
2. What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts?

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Expert Solution

Particulars uncollectible percentage amount uncollectible amount
accounts not yet due 10% $1,70,000.00 $17,000.00
accounts 1-45 15% $23,600.00 $3,540.00
accounts greater than 45 20% $9,400.00 $1,880.00
Total $22,420.00
uncollectible amount
Particulars Amount
op bal $42,300.00
added during the year $22,420.00
Total closing balance of uncollectible amount $64,720.00
Date Particulars Debit Credit
31.12.2021 uncollectible amount Dr $22,420.00
To Accounts receivable $22,420.00

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ekkarill92 answered 1 year ago
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