Daloy Company estimates uncollectible accounts using the allowance method at Dec

Question

Daloy Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. tho at Decamtar 01 to 30 31 to 60 31 to60)1201 to90 Accounts recervable Percent uncollectible $ 610,000 404,000 $ 98,000 44,000 26,000 s 38,000 3% 4% 7% 9% 12% a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 5% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method Estimated balance of allowance for uncollectibles

Explanation / Answer

Daley company Details Amt $ Accounts Receivable balance Dec 31.             610,000 Estimated Uncollectible % 5% Estimated Uncollectible amt                30,500 a. Balance of allowance for uncollectibles required $           30,500 When Allowance for doubtful a/cs balance is Credit of                  12,800 Required credit balace on Dec31.                30,500 Bad debt expense to be booked                17,700 When Allowance for doubtful a/cs balance is Debit of                    1,800 Required credit balace on Dec31.                30,500 Bad debt expense to be booked                32,300 b. Joirnal Entries Date Account Title Dr $ Cr $ Dec31. Bad Debt Expense                17,700 Allowance for Doubtful Accounts                    17,700 ( bad debt expense booking when allowance for bad debt balance is credit of $ 12800 Date Account Title Dr $ Cr $ Dec31. Bad Debt Expense                32,300 Allowance for Doubtful Accounts                    32,300 ( bad debt expense booking when allowance for bad debt balance is debit of $ 1800

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