Question

y to record estimated bad debes for July Regat Part 2 During ding accounts receivable ransactions and the adjustin August, total sales of $957.000 were recorded, all on credit. Sales returns and allowances 000. Collections during the month were $312.000, which included the recovery of $2.000 from sch . Count written off in a previous month. No accounts were written off during August. Tippleton Company ed its method of estimating bad debts to the balance sheet approach because the new accountants are accurately reflected uncollectible accounts. The resulting ang analysis determined to al estimated un- collectible accounts at August 31 to be $15,000. Required Prepare the August 31 adjusting entry to record estimated bad debts for August Problem 8-9A Estimating bad debts Los eXcel CHECK FIGURE: a. Total estimated uncollectible accounts $13,638 The following informations available regarding the outstanding accounts receivable of Mufa Contracting at (net) = $140,600 1. 2020, its year-end: September 30, 2020: Credit Mon of Credit Sale $1,650,000 3. Adey $35,000 $ 0 74.000 Aug. S - 1.000 9.900 $ 0 0 23.100 0 T. Holton W. NIX 16.500 12.200 15.000 5.600 A series are performed on terms of S e cony eroth try at October 31, 2020, balance sheet using your Mufu estimates bad debts using the following rates: 90 10 119 O ver 119 days past we day pant due 20% 50% 1 to 29 days30 to 55 days 60 to 89 days past due pas de paste 15 4% 10% Not yet due 0.5% Required a. Complete a Schedule of Accounts Receivable by Age at September 30, 2020 (similar to Exhibit 8.13). b. The Allowance for Doubtful Accounts showed an unadjusted balance on September 30, 2020, of $1,900. Record the adjusting entry at September 30, 2020, to estimate uncollectible accounts. 587

Answer 1

Mufu Contracting
Schedule of Accounts Receivable by Age
September 30, 2020
Customer's Name	Total	Not Yet Due	1 to 29 Days Past Due	30 to 59 Days Past Due	60 to 89 Days Past Due	90 to 119 Days Past Due	Over 119 Days Past Due
B. Axley	$35,000					$35,000
T. Holton	$126,500	$16,500	$36,000	$74,000
W. Nix	$45,200	$12,200	$9,900		$23,100
C. Percy	$21,400	$15,800		$5,600
K. Willis	$92,500	$92,500
Totals	$320,600	$137,000	$45,900	$79,600	$23,100	$35,000	$-
Percentage Uncollectible		0.50%	1%	4%	10%	20%	50%
Estimated Uncollectible Amount	$13,638	$685	$459	$3,184	$2,310	$7,000	$-

How ageing days are calculated?:

For example T. Holton is having sale of $74,000 on July 31 (As per assumption last day of month with n/30 terms), Then It shall become due after 30 days as on August 31. Since it remains unpaid Day would be counted as 1 Day of August plus 30 Days of September resulting to Total 31 Days past due. Holton has another Sale of $36,000 on August 31. It shall become due by end of September 30. As no payment is made by end of September 30, It shall also become due and kept it 1 to 29 Days Past due.

Journal Entry for Adjustment:

Date	Particulars	Debit	Credit
Sept .30	Bad Debt Expense	$11,738
	Allowance for Doubtful Accounts		$11,738
	(Estimated Bad debt recorded in Allowance for Doubtful Accounts. (13638 - 1900 = 11738)

T-Account for Allowance for Doubtful Accounts:

Allowance for Doubtful Accounts Unadjasted Balance Sep. 30 $ 1,900 $ 11,738 Adjustment Entry $ 13,638 Desired Adjustment Balance Sept. 30