Question

Daley Company prepared the following aging of receivables analysis at December 31.

				Days Past Due
	Total			0			1 to 30				31 to 60				61 to 90				Over 90
Accounts receivable	$	595,000		$	401,000			$	95,000			$	41,000			$	23,000			$	35,000
Percent uncollectible					3	%			4	%			7	%			9	%			12	%

a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using aging of accounts receivable.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $4,100 credit.
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $600 debit.

Answer 1

	Accounts receivable	Percent uncollectible (%)	Amount
Not due	401000	3%	12030
1 to 30:	95000	4%	3800
31 to 60:	41000	7%	2870
61 to 90:	23000	9%	2070
Over 90:	35000	12%	4200
Estimated balance of allowance for uncollectibles			24970	Credit

b
		Debit	Credit
Dec 31	Bad debts expense	20870		=24970-4100
	Allowance for doubtful accounts		20870
c
		Debit	Credit
Dec 31	Bad debts expense	25570		=24970+600
	Allowance for doubtful accounts		25570