Harper Industries uses the aging method to record the estimate for uncollectible

Question

Harper Industries uses the aging method to record the estimate for uncollectible accounts. Harper Industries provided the following information about its A/R account: Total A/R is $14,600; 1-30 days $9,650 [estimate 1% to be uncollectible]; 31-60 days $3,120 [estimate 10% to be uncollectible]; 61-90 days $1,090 [estimate 20% to be uncollectible]; and 91 days and over $740 [estimate 40% to be uncollectible]. The Allowance for Doubtful Accounts account has a current credit balance of $900. What is the amount of the adjustment to be recorded for the estimate of uncollectible accounts?

Explanation / Answer

Calculate allowance for doubtful accounts balance after adjustment

Adjusting amount = 922.50-900 = $22.50

So amount of the adjustment to be recorded for the estimate of uncollectible accounts = $22.50

Days Account receivable Uncollectible percent Uncollectible amount 1-30 dyas 9650 1% 96.50 31-60 3120 10% 312 61-90 1090 20% 218 91 days and over 740 40% 296 Total 14600 922.50

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