Question

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? _____________

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