Question

Louise and Elizabeth Cake Designs allow customers to charge on account. Their year end is December 31, 2020. They have provided the below aged accounts receivable ledger as at December 31, for you to prepare the required entry to record the bad debt expense. 

Customer   0–30 days   31–60 days   61–90 days   + 90 days    Total 

MacDonald                                                               $5,500        $5,500

Cameron      600                                   $7,200                           $7,800

Yeboah                             300                                                        300

Coderre                                                  4,100           3,700         7,800

Porter                               9,400                                                   9,400

Roberts                                                    350                                350

                      600             9,700             11,650          9,200         31,150

Louise and Elizabeth estimate, based on history, the percentage uncollectible accounts are as follows: 

• accounts between 0 and 30 days - 3% 

• accounts between 31 and 60 days - 5% 

• accounts between 61 and 90 days - 8% 

• accounts over 90 days old - 15%.

Instructions:

Assuming the unadjusted balance in Allowance for Doubtful Accounts is a $1,000 debit, prepare the adjusting entry to record the current year’s bad debt expense.