Question

Following is a list of credit customers along with their amounts owed due and the days past due at December 31. Following that list are five classifications of accounts receivable and estimated bad debts percent for each class.

	Days Past Due
	0			1 to 30				31 to 60				61 to 90				Over 90
Percent uncollectible		1	%			3	%			5	%			8	%			12	%

Customer	Accounts Receivable			Days Past Due
BCC Company	$	4,000			12
Lannister Co.		1,000			0
Mike Properties		5,000			107
Ted Reeves		500			72
Jen Steffens		2,000			35

1. Create an aging of accounts receivable schedule of accounts receivable by age similar to the table given above. Calculate the estimated balance for the Allowance for Doubtful Accounts.

2. Assuming an unadjusted credit balance of $100, record the required adjustment to the Allowance for Doubtful Accounts.

Answer 1

1.

Customer	Accounts receivable	Percent uncollectible	Estimated uncollectble
Lannister Co.	1,000	1%	10
BCC Company	4,000	3%	120
Jen Steffens	2,000	5%	100
Ted Reeves	500	8%	40
Mike Properties	5,000	12%	600
			870

Estimated balance of allowance for doubtful accounts = $870

2.

Bad debt expense =Estimated balance of allowance for doubtful accounts - Existing credit balance in allowance for doubtful accounts

= 870-100

= $770

General Journal	Debit	Credit
Bad debt expense	$770
Allowance for doubtful accounts		$770