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

Exercise 7-13 (Algo) Calculate uncollectible accounts using the aging method; record adjustment (L07-5, 7-6) 

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

 1. Accounts not yet du 106,000; estimated uncollectible = 10%

 2. Accounts 1-45 days due - $14,700; estimated uncollectible = 15%

 3. Accounts more than 45 days past due $5,900; estimated uncollectible = 20%.


Before recording any adjustments, Dhaliwal has a debit balance of $26,700 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?


Exercise 7-13 (Algo) Calculate uncollectible accounts using the aging method; record adjustment (L07-5, 7-6) Dhaliwal Digital

Journal entry Yorksheet < 1 Record the adjustment to allowance for uncollectible accounts. Note: Enter debits before credits.


Solutions

Expert Solution

Answer

  • Requirement 1

Balance in Allowance for uncollectible accounts
= ($106000 x10%) + ($14700 x 15%) + ($5900 x 20%)
= 10600 + 2205 + 1180
= $ 13,985 [Credit] Answer

  • Requirement 2

Accounts title

Debit

Credit

Bad Debt Expense or Uncollectible account expense

$40,685

   Allowance for Uncollectible Accounts [$ 13985 + $26700 Debit balance]

$40,685

ekkarill92 answered 2 years ago
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