Question

Shamrock Merchandising uses an aging schedule to determine its estimated uncollectible accounts at year end. The percentage estimates of bad debts are as follows:

SHAMROCK MERCHANDISING Aged Schedule of Accounts Receivable
No. of Days Outstanding	Amount			Estimated % Uncollectible
0–30 days		$61,000			0.40%
31–60 days		26,300			5.75%
61–90 days		11,600			19.00%
Over 90 days		4,800			48.00%
		$103,700

The Allowance for Doubtful Accounts has an unadjusted $1,730 credit balance and the company uses the aging schedule to determine estimated uncollectible accounts.

Date	Account Titles and Explanation	Debit	Credit
Dec. 31

The Allowance for Doubtful Accounts has an unadjusted $1,730 debit balance and management estimates that 8% of accounts receivable will be uncollectible.

Date	Account Titles and Explanation	Debit	Credit
Dec. 31

Answer 1

No. of Days Outstanding	Amount	Estimated % Uncollectible	Estimated Amount Uncollectible
0–30 days	61000	0.40%	244.00
31–60 days	26300	5.75%	1512.25
61–90 days	11600	19.00%	2204.00
Over 90 days	4800	48.00%	2304.00
Total	103700		6264.25

1
Account Titles and Explanation	Debit	Credit
Bad debts expense	4534.25 or 4534		=6264.25-1730
Allowance for Doubtful Accounts		4534.25 or 4534
2
Account Titles and Explanation	Debit	Credit
Bad debts expense	10026		=(103700*8%)+1730
Allowance for Doubtful Accounts		10026