Question

Whispering Company has accounts receivable of $108,600 at March 31, 2020. Credit terms are 2/10, n/30. At March 31, 2020, there is a $1,500 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is shown below.

Age of Accounts

Balance,
March 31

Age of Accounts		Balance, March 31				Estimated Percentage Uncollectible
		2020		2019
Current		$72,300		$75,000		4%
1–30 days past due		18,200		8,000		7%
31–90 days past due		9,300		2,400		24%
Over 90 days past due		8,800		1,100		55%
		$108,600		$86,500

Question 1)

Determine the total estimated uncollectibles. $_____

Total estimated uncollectibles

Question 2) Prepare the adjusting entry at march 31 to record bad debt.

Answer 1

Requirement 1

Estimated balance of allowance for doubtful accounts

$       11,238.00

Working

	Accounts receivables	x	Percent Uncollectable (%)	=	Estimated Uncollectable
Current	$        72,300.00	x	4.00%	=	$         2,892.00
1 to 30 days	$        18,200.00	x	7.00%	=	$         1,274.00
31 to 90	$          9,300.00	x	24.00%	=	$         2,232.00
Over 90	$          8,800.00	x	55.00%	=	$         4,840.00
Estimated balance of allowance for doubtful accounts					$       11,238.00

.

Requirement 2

General Journal	Debit	Credit
Bad debts expense	$          9,738.00
Allowance for doubtful accounts		$    9,738.00
(To record bad debts expense)

Working

Estimated balance of allowance for uncollectables	$ 11,238.00	Cr
Balance in Allowance for uncollectable account (Cr)	$    1,500.00	Cr
Total bad debts to be recorded	$    9,738.00	Cr