Monroe Company has $3,000,000 in credit sales during 2014. The beginning balance of
the allowance for doubtful accounts is $30,000 and the company writes off $7,000 in bad
debts during the year. a. Determine the estimated amount needed in the allowance for doubtful accounts using
the aging of accounts receivable method, given that $1,600,000 of receivables are
current (estimated that 0.5% are uncollectible), $349,000 are 1-60 days late (estimated
that 1.25% are uncollectible) and $52,000 are over 60 days late (estimated that 50% are
uncollectible).
b. Using the aging of accounts method and your calculation from part a., provide the
necessary journal entry to record bad debt expense and adjust the allowance for
uncollectible accounts to the necessary balance.
