Question

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


Total (Days Past Due) 0 (Days Past Due) (Days Past Due) 1 to 30 (Days Past Due) 31 to 60 (Days Past Due) 61 to 90 (Days Past Due) Over 90
Accounts receivable $620,000 $406,000 $100,000 $46,000 $28,000 $40,000
Percent uncollectible 2% 3% 6% 8% 11%


Required:
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 $4,600 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 $1,100 debit.

Answer 1

Answer:

The answers are given below;

Explanation:

a. Allowance for doubtful accounts closing balance=$20,520 406,000*2%+100,000*3 %+46,000*6%+28000*8%+40000*11%

b. Allowance for doubtful accounts-opening   ($4,600)

  Allowance for doubtful accounts-closing       $20,520

  Allowance for the year                                       $15,920

c. Allowance for doubtful accounts-opening Dr. $1,100

  Allowance for doubtful accounts-closing      $20,520

Bad Debt Expense                                             $21,620

Bad Debt Expense Dr.$21,620

Allowance for Doubtful Accounts Cr.$21,620