Question

Honey Co. has accounts receivable of $97,900 at April 31, 2023. Credit terms are 2/10, n/30. At April 31, 2023, there is a $1,951 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company’s estimates of bad debts are as shown below.

		Balance, April 31				Estimated Percentage Uncollectible
Age of Accounts		2023		2022
Current		$69,000		$80,200		2	%
1–30 days past due		12,000		7,260		5
31–90 days past due		9,900		2,500		28
Over 90 days past due		7,000		1,060		53
		$97,900		$91,020

1. Determine the total estimated uncollectibles at April 31, 2023.

2. Prepare the adjusting entry at April 31, 2023, to record bad debt expense.

Answer 1

1) total estimated uncollectible

Days	Account receivable	% Uncollectible	$ Uncollectible
Current	69000	2%	1380
1-30 days past due	12000	5%	600
31-90 days past due	9900	28%	2772
Over 90 days	7000	53%	3710
Total			8462

Total estimated uncollectible = 8462

2) Adjusting entry

Date	account and explanation	Debit	Credit
Apr 30	Bad debt expense (8462-1951)	6511
	Allowance for doubtful accounts		6511
	(To record adjusting entry)