Hachey Company has accounts receivable of $95,100 at March 31, 2007. An analysis
ID: 2378875 • Letter: H
Question
Hachey Company has accounts receivable of $95,100 at March 31, 2007. An analysis of the accounts shows these amounts.
Month of Sale 2007 2006
March $65,000 $75,000
February 12,600 8,000
Dec. & Jan. 10,100 2,400
Nov. & Oct. 7,400 1,100
$95,100 $86,500
Credit terms are 2/10, n/30. At March 31, 2007, there is a $2,200 credit balance in Allowance
for Doubtful Accounts prior to adjustment. The company uses the percentage of
receivables basis for estimating uncollectible accounts. The company
Explanation / Answer
Current 3% x $62,800 = $1,884
1-30 days past due 8% x $12,750 = $13,859
31-90 days past due 35% x $10,800 = $ 3,780
Over 90 days 53% x $7,780 = $4,123
Total estimated uncollectibles $23,646 - Answer
Since there is already a credit in the allowance acct, the adjusting entry would be for $23,646 - $2,200 = $21,446
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