Question

Refer to the information in Exercise 9.8 to complete the following requirements. Exercise 9-9 a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 4.5% of Percent of receivables total accounts receivable to estimate uncollectibles, instead of the aging of receivables method. method b. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the P3 unadjusted balance in the Allowance for Doubtful Accounts is a $12.000 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 $1.000 debit. c.10

Answer 1

Answer- 9-8-

х = $ II Accounts Percent uncollectible (%) receivable Not due: $ 396,000 1 % 1 to 30: 90,000 2 % 31 to 60 36,000 5 61 to 90: 18,000 7 Over 90 30,000 10 % Estimated balance of allowance for uncollectibles х 5 3,960 1,800 1,800 1,260 3,000 11,820 credit х $

llarice! IS do Credit Date Dec 31 General Journal Bad debts expense Allowance for doubtful accounts Debit 8,220 8,220 Dec 31 11,920 Bad debts expense Allowance for doubtful accounts 11,920

9-9-

a
Estimated balance of allowance for uncollectibles	25650	Credit	=570000*4.5%
b
Date	General Journal	Debit	Credit
31-Dec	Bad debts expense	13,650		=25650-12000
	Allowance for doubtful accounts		13,650
31-Dec	Bad debts expense	26,650		=25650+1000
	Allowance for doubtful accounts		26,650