Question

On December 31, 2017, Toro Company’s Allowance for Doubtful Accounts had an unadjusted credit balance of $42,000. The accountant for Toro has prepared a schedule of the December 31, 2017, accounts receivable by age and, on the basis of past experience, has estimated the percentage of the receivables in each age category that will become uncollectible. This information is summarized as follows: December 31, 2017 Accounts Receivable Age of Accounts Receivable Expected Percentage Uncollectible $2,050,000 Not due (under 30 days) 1.25% 971,000 1 to 30 days past due 2.00 207,000 31 to 60 days past due 6.50 132,000 61 to 90 days past due 33.00 34,000 Over 90 days past due 68.00 Required: 1. Calculate the amount that should appear in the December 31, 2017, balance sheet as the allowance for doubtful accounts. 2. Prepare the journal entry to record bad debt expense for 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Calculation of estimated uncollectible
accounts Rec A	Age	Expected % uncollectible	Uncollectible amt A*%
$2,050,000	not due	1.25%	$25,625.00
971000	1 to 30	2%	$19,420.00
207000	31-60 days	6.50%	$13,455.00
132000	61-90	33%	$43,560.00
3400	over 90 days	68%	$2,312.00
			$104,372.00
ans 1 Amt that would appear in balance sheet
allowance for doubtful accounts			$104,372.00
ans 2	Dr	Cr
Bad debt expenses	62372
allowance for doubtful accounts		62372
(104372-42000)