Question

Daley Company prepared the following aging of receivables analysis at December 31. Exercise 98 Days Post TO P3 11 30 31 61 90 Oro 5570.000 $395.000 590.000 50.000 $13.000 Accounts receivable Percent collect $30.000 10 a. Estimate the balance of the 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 $3,600 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from purta. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a 5100 debit.

Answer 1

Question :

Answer :

a	Estimate balance of the allowance for Doubtful accounts using ageing of account receivable
	Days past Due	Amount Receivable	Percent uncollectible	Amount Uncollectible
	0	$3,96,000	1%	$3,960
	1 to 30	$90,000	2%	$1,800
	31 to 60	$36,000	5%	$1,800
	61 to 90	$18,000	7%	$1,260
	over 90	$30,000	10%	$3,000
	Total	$5,70,000		$11,820
b	Journal Entry
Date	Account and Explanation	Debit	Credit
Dec-31	Bad debts Expense Dr	$8,220
	Allowance for doubtful accounts		$8,220
	( to adjust the allowance account from $ 3600
	to target balance of   $ 11820 )
c	Journal Entry
Date	Account and Explanation	Debit	Credit
Dec-31	Bad debts Expense Dr	$11,920
	Allowance for doubtful accounts		$11,920
	( to adjust the allowance account from $ 100(debit)
	to target balance of   $ 11820 )