Question

Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts.

 1. Accounts not yet due $285,000; estimated uncollectible = 5% .

 2. Accounts 1-45 days past due $39,600; estimated uncollectible = 10%

 3. Accounts more than 45 days past due $15,800; estimated uncollectible = 15% 

Before recording any adjustments, Dhaliwal has a debit balance of $71,100 in its allowance for uncollectible accounts. 

Required:

 1. Estimate the appropriate 12/31/2021 balance for Dhaliwal's allowance for uncollectible accounts.

 2. What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts? 

Answer 1

285,000	5%	14,250
39,600	10%	3,960
15,800	15%	2,370
Balance in allowance for uncollectible accounts		20,580

Event	General Journal	Debit	Credit
Dec. 31, 2021	Bad debt expense (71,100+20,580)	91,680
	Allowance for uncollectible accounts		91,680