Question

Required information [The following information applies to the questions displayed below.] Daley Company prepared the following aging of receivables analysis at December 31. Days Past Due Total $665,000 Accounts receivable Percent uncollectible $415,000 2% 1 to 30 $109,000 3% 31 to 60 $55,000 6% 61 to 90 $37,000 8% Over 90 $49,000 11% a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using aging of accounts receivable. b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $5,500 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $2,000 debit.

Answer 1

1) Schedule

	Account receivable	Percent uncollectible	Uncollectible amount
Not yet due	415000	2%	8300
1 to 30	109000	3%	3270
31 to 60	55000	6%	3300
61 to 90	37000	8%	2960
Over 90	49000	11%	5390
Total			23220

b) Adjusting entry

Date	account and explanation	Debit	Credit
Dec 31	Bad debt expense (23220-5500)	17720
	Allowance for doubtful account		17720

c) Adjusting entry

Date	account and explanation	Debit	Credit
Dec 31	Bad debt expense (23220+2000)	25220
	Allowance for doubtful account		25220