Question

Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following...

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.

Homework Answers

Answer #1

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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