Daley Company estimates uncollectible accounts using the allowance method at December 31. It 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 | $ | 645,000 | $ | 411,000 | $ | 105,000 | $ | 51,000 | $ | 33,000 | $ | 45,000 | |||||||||||
| Percent uncollectible | 1 | % | 2 | % | 5 | % | 7 | % | 10 | % | |||||||||||||
a. Complete the below table to calculate the
estimated balance of Allowance for Doubtful Accounts using the
aging of accounts receivable method.
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
$5,100 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
$1,600 debit.
a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method.
| Total | 0 | 1 to 30 | 31 to 60 | 61 to 90 | Over 90 | |
| Account receivable | 645000 | 411000 | 105000 | 51000 | 33000 | 45000 |
| Percent uncollectibles | 1% | 2% | 5% | 7% | 10% | |
| Uncollectible amount | 15570 | 4110 | 2100 | 2550 | 2310 | 4500 |
a) Estimated balance of allowance for doubtful accountss = $15570
b) Adjusting entry :
| Date | account and explanation | debit | credit |
| Bad debt expense (15570-5100) | 10470 | ||
| Allowance for doubtful accounts | 10470 | ||
| (To record adjusting entry) |
c) Adjusting entry :
| Date | account and explanation | debit | credit |
| Bad debt expense (15570+1600) | 17170 | ||
| Allowance for doubtful accounts | 17170 | ||
| (To record adjusting entry) |
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