Exercise 8-6 Whispering Winds Corp. has accounts receivable of $93,600 at March 31, 2019. Credit terms...

Exercise 8-6

Whispering Winds Corp. has accounts receivable of $93,600 at March 31, 2019. Credit terms are 2/10, n/30. At March 31, 2019, there is a $2,216 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company’s estimates of bad debts are as shown below.

	Balance, March 31			Estimated Percentage Uncollectible
Age of Accounts		2019	2018	Estimated Percentage Uncollectible
Current		$63,800	$69,450		2	%
1–30 days past due		12,200	7,740		5
31–90 days past due		10,000	2,630		29
Over 90 days past due		7,600	1,140		54
		$93,600	$80,960

a. Determine the total estimated uncollectibles for 2019.

b. Prepare the adjusting entry at March 31, 2019, to record bad debt expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Solutions

Expert Solution

Requirement a

	Accounts receivables	x	Percent Uncollectable (%)	=	Estimated Uncollectable
Current	$ 63,800.00	x	2.00%	=	$ 1,276.00
1 to 30:	$ 12,200.00	x	5.00%	=	$ 610.00
31 to 90:	$ 10,000.00	x	29.00%	=	$ 2,900.00
Over 90:	$ 7,600.00	x	54.00%	=	$ 4,104.00
Estimated balance of allowance for uncollectibles					$ 8,890.00

Requirement b

General Journal	Debit	Credit
Bad debts expense	$ 6,674.00
Allowance for doubtful accounts		$ 6,674.00
(To record bad debts expense)

Working

Requirement b working	Estimated balance of allowance for uncollectables	$ 8,890.00	Cr
	Balance in Allowance for uncollectable account (Cr)	$ 2,216.00	Cr
	Total bad debts to be recorded	$ 6,674.00	Cr

ekkarill92 answered 1 year ago

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