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Arundel Company uses aging to estimate uncollectibles.  At the end of the fiscal year, December 31, 2018,...

Arundel Company uses aging to estimate uncollectibles.  At the end of the fiscal year, December 31, 2018, Accounts Receivable has a balance that consists of:

Dollar Value

Age of Account

Estimated Collectible

$235,000

< 30 days old

98.0%

60,000

30 to 60 days old

95.0%

25,000

61 to 120 days old

77.0%

6,000

> 120 days old

17.0%

The current unadjusted Allowance for Uncollectible Accounts balance is a debit balance of $2,000 and the Bad Debt Expense accounts has an unadjusted balance of zero. After the adjusting entry is made, what will be the dollar balances in the Allowance for Doubtful Accounts? Round to nearest whole dollar.

Solutions

Expert Solution

Age on account Dollar value Estimated uncollectible Uncollectible amount
< 30 days old $         235,000 2.00% $                                  4,700
30 to 60 $           60,000 5.00% $                                  3,000
61 to 120 $           25,000 23.00% $                                  5,750
> 120 $              6,000 83.00% $                                  4,980
Total uncollectible amount $                                18,430

Adjusting entry for baddebt will be ($18,430 + $2,000) = $20,430

dollar balances in the Allowance for Doubtful Accounts = $18,430 Credit

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ekkarill92 answered 1 year ago
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