Question

Net Zero Products, a wholesaler of sustainable raw materials. Prepared the following aging of receivables analysis. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 125,500 $ 83,000 $ 21,000 $ 8,500 $ 5,500 $ 7,500 Percent uncollectible 1 % 2 % 4 % 6 % 10 % 1. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method. 2. Prepare the adjusting entry to record bad debts expense assuming the unadjusted balance in the Allowance for Doubtful Accounts is a $1,300 credit.

Answer 1

1)

Estimatede Balance of Allowance of uncollectible Accounts
Age group	Account Receivables	% Uncollectible	$ Uncollectible
Not yet due	83000	1%	830
1-30 days	21000	2%	420
31-60 days	8500	4%	340
61-90 days	5500	6%	330
over 90 days	7500	10%	750
Total			2670

2. Journal Entry to record Bad Debt:

Estimated Balance of Uncollectible Accounts	2670
Less: Existing Balance of uncollectible accounts	1300
Bad Debt Expense	1370

Account title	Debit	Credit
Bad debt expenses	1370	.
Allowance for uncollectible accounts	.	1370