Question

Net Zero Products, a wholesaler of sustainable raw materials. Prepared the following aging of receivables analysis....

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.

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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
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