Question

Finland Inc has the following Accounts Receivable Aging on March 31 Aging Bucket Current 1-90 days...

Finland Inc has the following Accounts Receivable Aging on March 31

Aging Bucket Current 1-90 days 91-180 days 181-365 days 366+ days
Amount Outstanding 300,000 180,000 100,000 50,000 15,000

March sales were $320,000

February ending balance in Allowance for Doubtful Accounts was $30,000 Credit

Finland uses the Percentage of Receivables Method and a 5% reserve rate. What journal entry should Finland book at the end of March to estimate bad debt?

DR: Cash, Bad Debt Expense, Allowance for Doubtful Accounts, Accounts Receivable (2,250, 14,000, or 15,000)

CR: Cash, Bad Debt Expense, Allowance for Doubtful Accounts, Accounts Receivable (2,250, 14,000, or 15,000)

Business   Accounting   
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Answer #1
Total Accounts receivable -Gross 645000
(300,000+180,000+100,000+50,000+15,000)
Multiply: Estimated % of uncollectible 5%
Required balance of Allowance 32250
Less: Credit balance of Allowance 30000
Bad debts expense 2250
Journal entry
S.no. Accounts title and explanations Debit $ Credit $
a. Bad debts expense 2250
    Allowance for doubtful accounts 2250
(for bad debts expense recognized)
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