Question

MICA Company’s Allowance for Doubtful Accounts had an unadjusted credit balance of $300. Total Accounts Receivable...

MICA Company’s Allowance for Doubtful Accounts had an unadjusted credit balance of $300. Total Accounts Receivable on December 31, 202x, of $43,000 is aged as follows:

December 31, 202x Accounts Receivable

Age of Accounts Receivable

Expected Percentage Uncollectible

$25,000

Not due (under 30 days)

1%

14,000

1-30 days past due

2%

4,000

Over 30 days past due

5%

What amount would be recorded in the December 31, 202x
adjusting entry to estimate uncollectible accounts receivable? _____________

Homework Answers

Answer #1
Ageing schedule:
Age Accounts receivable Expected % uncollectible Uncollectible amount
a b a*b
Not due 25000 1% 250
1-30 days 14000 2% 280
Over 30 days 4000 5% 200
Total 43000 730
Total estimated uncollectible amount=$ 730
Desired ending balance in allowance for uncollectible accounts=$ 730
Current balance in allowance for doubtful accounts=$ 300 credit
Hence,Amount of adjusting entry=730-300=$ 430
Adjusting entry:
Date Debit Credit
Dec 31. Bad debt expense 430
Allowance for Doubtful Accounts 430
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