Question

Following is a list of credit customers along with their amounts owed due and the days past due at December 31. Following that list are five classifications of accounts receivable and estimated bad debts percent for each class.

Following is a list of credit customers along with their amounts owed due and the days past due at December 31. Following that list are five classifications of accounts receivable and estimated bad debts percent for each class. Days Past Due 0 1 to 30 31 to 60 61 to 90 Over 90 Percent uncollectible 1 % 3 % 5 % 8 % 12 % Customer Accounts Receivable Days Past Due BCC Company $ 5,600 10 Lannister Co. 2,600 0 Mike Properties 6,600 104 Ted Reeves 1,300 80 Jen Steffens 3,600 42 1. Create an aging of accounts receivable schedule of accounts receivable by age similar to the table given above. Calculate the estimated balance for the Allowance for Doubtful Accounts. 2. Assuming an unadjusted credit balance of $260, record the required adjustment to the Allowance for Doubtful Accounts.

Customer	Accounts Receivable			Days Past Due
BCC Company	$	5,600			10
Lannister Co.		2,600			0
Mike Properties		6,600			104
Ted Reeves		1,300			80
Jen Steffens		3,600			42

1. Create an aging of accounts receivable schedule of accounts receivable by age similar to the table given above. Calculate the estimated balance for the Allowance for Doubtful Accounts.

2. Assuming an unadjusted credit balance of $260, record the required adjustment to the Allowance for Doubtful Accounts.

Answer 1

Solution Required 1.: Customer Over 90 Schedule of accounts receivable by age Accounts Days Past due Receivable 0 1 to 30 | 31 to 60 61 to 90 $5,600 $5,600 $2,600 $2,600 $6,600 $1,300 $1,300 $3,600 $3,600 $19,700 $2,600 $5,600 $3,600 $1,300 1% 3% 5% 8% BCC Company Lannister Co. Mike Properties Ted Reeves Jen Steffens Total (a) Percent uncollectible (b) Allowance for Doubtful Accounts (c = axb) $6,600 $6,600 12% $26 $168 $180 $104 $792 Allowance for Doubtful Accounts (Total) $1,270 Estimated balance for the Allowance for Doubtful Accounts $1,270 Required 2.: Estimated Allowance for Doubtful Accounts Less: Unadjusted Credit balance in Allowance for Doubtful Accounts Additional provision required under Allowance for Doubtful Accounts $1,270 ($260) $1,010 Adjustment Entry Credit Date December 31 Account Titles and Explanation Uncollectible Accounts expense (*) Allowance for Doubtful Accounts (To adjust allowance for doubtful accounts) | Debit $1,010 | $1,010 (*) In place of account title "Uncollectible Accounts expense", "Bad debts expense" account title may also be used.