Question

Question 6: The following selected information is from Imagine Corporation’s partial aging schedule at the end of August:

Number of Days Outstanding:   Accounts Receivable:   Estimated Percentage Uncollectible: Estimated Uncollectible Accounts

0-30 days $280, 000 1%

31-60 days $90,000 3%

61-90 days $45,000 10%

Over 90 days $18,000 15%

Total: $433,000

The unadjusted balance in Allowance for Doubtful Accounts is a debit of $4,300.

Required

(a) Complete the aging schedule and calculate the total estimated uncollectible accounts from the above information.

(b) Prepare the adjusting journal entry to record the bad debts for the month using the information determined in part (a)

(c) In September, management determined that $4,200 of the outstanding receivables were uncollectible. Prepare the journal entry to write off the uncollectible amount.

(d) Imagine Corporation subsequently collected $2,300 of the $4,200 that was determined to be uncollectible in part (c). Prepare the journal entry(ies) to record the collection.

Answer 1

a)

Age on account	Dollar value	Estimated uncollectible	Uncollectible amount
0-30 Days	$         280,000	1%	$                                  2,800
31-60 Days	$           90,000	3%	$                                  2,700
61-90 Days	$           45,000	10%	$                                  4,500
More than 90 Days	$           18,000	15%	$                                  2,700
Total uncollectible amount			$                                12,700

b)

Baddebt expenses ($12,700+$4,300)	$   17,000
Allowance for doubtful accounts		$   17,000

c)

Allowance for doubtful accounts	$   4,200
Accounts receivable		$   4,200

d)

Accounts receivable	$   2,300
Allowance for doubtful accounts		$   2,300
Cash	$   2,300
Accounts receivable		$   2,300

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