Question

Godfreid Company has accounts receivable of $95,400 at March 31, 2020. Credit terms are 2/10, n/30. At March 31, 2020, there is a $2,100 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 estimate of bad debts is shown below.

Age of Accounts		Balance, March 31				Estimated Percentage Uncollectible
		2020		2019
Current		$65,000		$75,000		2%
1–30 days past due		12,900		8,000		5
31–90 days past due		10,100		2,400		30
Over 90 days past due		7,400		1,100		50
		$95,400		$86,500

(c)

Discuss the implications of the changes in the aging schedule from 2019 to 2020.

Answer 1

Answer-Total estimated uncollectible:-

Age of Accounts		Balance, March 31		Estimated Percentage Uncollectible	Allowance
		2020
Current		$65,000		2%	1,300
1–30 days past due		12,900		5%	645
31–90 days past due		10,100		30%	3,030
Over 90 days past due		7,400		50%	3,700
		$95,400			$8,675

Journal Entry:-

Date	General Journal	Debit ($)	Credit ($)
	Bad debts expenses	6,575
	Allowance for doubtful debts		6,575
	(allowance record $8,675-$2,100)

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