Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance...
Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 3%, (2) 17%, and (3) 32%, respectively. At December 31, 2019, the unadjusted credit balance in the Allowance for Doubtful Accounts was $250. The total Accounts Receivable in each age category were: (1) 1-30 days old, $66,000, (2) 31-90 days old, $14,000, and (3) more than 90 days old, $5,000.
Required: Calculate the estimate of uncollectible accounts at December 31, 2019.
Prepare the appropriate adjusting entry dated December 31, 2019.
Homework Answers
1.
| Categories | Portion of receivables | Receivable in each age category | Uncollectible accounts |
| 1-30 | 3% | 66000 | 1980 |
| 31-90 | 17% | 14000 | 2380 |
| more than 90 days old | 32% | 5000 | 1600 |
| Estimate of uncollectible accounts | 5960 |
2.
| Date | General Journal | Debit | Credit |
| December 31, 2019 | Bad debt expense | 5710 | |
| Allowance for doubtful debts | 5710 | ||
| [5960-250] |
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Twilight Company uses the aging of accounts receivable method to
estimate Bad Debt Expense. The balance...
Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance...
Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 2%, (2) 14%, and (3) 38%, respectively At December 31, 2019, the unadjusted credit...
Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance...
Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 2%, (2) 13%, and (3) 37%, respectively. At December 31, 2019, the unadjusted credit...
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