Question

Complete the table to determine the Baddebt Expenses for the period.

Villanueva, Inc. is a supplier of supplies. The following is the status of accounts receivable ("Aging")

Maturity Intervals	Balance	Percent	Amount
Non pastdue	345,000.00	2%
1- 30 days	96,000.00	4%
31-60 days	27,000.00	9%
61-90 days	22,000.00	15%
91-180 days	7,300.00	60%
Over180 days	5,500.00	85%
Totals

Assuming a credit balance of $3,050.00 on the counter account. (Allowancefordoubtfulaccounts.) How much should we affect the account?
Determine the net realizable value after adjustment.
Prepare the entries for the period adjustment.

Answer 1

Maturity Intervals	Balance (a)	Percent (b)	Amount (a x b)
Non past due	$345,000	2%	$6,900
1- 30 days	$96,000	4%	$3,840
31-60 days	$27,000	9%	$2,430
61-90 days	$22,000	15%	$3,300
91-180 days	$7,300	60%	$4,380
Over180 days	$5,500	80%	$4,400
Total	$502,800		$25,250

.

.How much should we affect the account = $22,200

Calculation:
Balance in Allowance for Doubtful accounts after adjustment [Calculated above]			$25,250
Less: Balance in Allowance for Doubtful Accounts before adjustment [Mentioned in question]			$3,050
Bad Debt Expense			$22,200

.

.

Determine the net realizable value after adjustment

Calculation:
Total accounts receivable [$305,000 + $96,000 + $27,000 + $22,000 + $7,300 + $5,500]			$502,800
Less: Balance in Allowance for Doubtful accounts after adjustment           [Calculated above]			$25,250
Net realizable value			$477,550

.

.

Prepare the entries for the period adjustment.

Account titles and Explanation	Debit	Credit
Bad debt expense	$22,200
Allowance for Doubtful Accounts		$22,200
(To record bad debt expense)