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 $640,000 Accounts receivable Percent uncollectible $410,000 3% 1 to 30 $104,000 4% 31 to 60 61 to 90 $50,000 $32,000 Over 90 $44,000 12% 7 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 $5,000 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 $1,500 debit.

Answer 1

Daley Company Journal Enteries Trans. Particulars Debit in $ Credit in $ b. Bad Debts Expense a/c Dr. 23120 To Allowance for doubtful 23120 (To estimate bad debts) 28120 - 5000 Accounts Percent Receivable Uncollectible Not due 410000 3% 1 to 30 104000 4% 31 to 60 50000 7% 61 to 90 32000 9% Over 90 44000 12% Estimated balance of allowance for uncollectibles C. 29620 12300 4160 3500 2880 5280 28120 Bad Debts Expense a/c Dr. To Allowance for doubtful (To estimate bad debts) 28120 + 1500 29620 Cr.