Question

Your company has $3,700,000 in credit sales during 2011. The beginning balance of the allowance for doubtful accounts is $3,600 and the company writes off $600 in bad debts during the year. (a)Calculate the estimated doubtful accounts using the aging of accounts receivable method given that $1,520,000 of the credit sales are not yet due (estimated that 0.3% are uncollectible), $345,000 are 1-60 days late (estimated that 2.60% are uncollectible) and $10,000 are over 60 days late (estimated that 32% are uncollectible). (Omit the "$" sign in your response.) Estimated doubtful accounts (b)Using the assumptions in the initial problem statement above, and using the aging of accounts method, calculate the bad debt expense. Show your calculation in a T-account for Allowance for doubtful accounts and present the journal entry to record bad debt expense. (Omit the "$" sign in your response.) Allowance for doubtful accounts Write-offs Beginning balance Bad debt expense Ending balance General Journal DebitCredit

Answer 1

req a:
Age		AR balance	Estimated Unrealisable		Estimate Allowance
Not yet due		1520000	0.30%		4560
Jan-60		345000	2.60%		8970
over61		10000	32%		3200
		Estimated Doudtful accounts			16730
Req b:
Bad debts expenses:
Begininng balance of Allowance				3600
Less: Amount write off				-600
Balance to be in Allowance				3000
Requirred balance in Allowance				16730
Bad debts expenses:				13730
Allowance for Doubtful accounts:
Accounts receivable		600	3600	Balance beginning
			13730	Bad debts expenss
			16730	Ending balance
Journall entry:
Bad debts expenses				13730
Allowance for doubtful accounts					13730
Req c:
Credit sales				3700000
Multiply: Estimated bad debts %				1.50%
Bad debts expenses				55500
Journall entry:
Bad debts expenses				55500
Allowance for doubtful accounts					55500