Question

Problem 7-3A Aging accounts receivable and accounting for bad debts LO P2, P3 

On December 31, Jarden Co.'s Allowance for Doubtful Accounts has an unadjusted credit balance of $16,000. Jarden prepares a schedule of its December 31 accounts receivable by age.

Problem 7-3A Part 1 

Required:

 1. Compute the required balance of the Allowance for Doubtful Accounts at December 31. 

2. Prepare the adjusting entry to record bad debts expense at December 31. (Round percentage answers to nearest whole percent. Do not round intermediate calculations.) 

Answer 1

Schedule

	Account receivable	*	Percent Uncollectible	=	Estimated uncollectible
Not due	900000	*	1.30%		11700
1-30	360000	*	2.05%		7380
31-60	72000	*	6.55%		4716
61-90	34600	*	33%		11418
Over 90	14400	*	69%		9936
Total					45150

Adjusting entry

date	account and explanation	Debit	Credit
Dec 31	Bad debt expense (45150-16000)	29150
	Allowance for doubtful accounts		29150

3) Under allowance method write off directly does not effect net income