A company has the following unadjusted account balances at December 31, of the c

Question

A company has the following unadjusted account balances at December 31, of the current year. Accounts Receivable of $185,700 and Allowance for Doubtful Accounts of 51,600 (credit balance). This company uses the aging of accounts receivable to estimate its bad debts. The following aging schedule reflects its accounts receivable at the current year-end: Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet. Prepare the adjusting journal entry to record bad debts expense for the current year. Acorn Company is starting a Petty cash fund. On November 1, 2015 they funded the Petty cash fun with $250. On November 30 they had the following: Receipt dated 11/6 for $42 of Postage Receipt dated 11/10 for $62 for Food for a customer appreciation party Receipt dated 11/16 for $50 for Window cleaning Receipt date 11/20 for $15 reimbursement for gas for the manager to go to a meeting There was $75 remaining in the Pettv cash fund on

Explanation / Answer

Answer:

Year end estimated balance in Allowance for doubtful accounts = $9,994

Less: Existing credit balance in allowance for doubtful accounts = ($1,600)

Current period debit to bad debt expesnes                              = $8,394

So the journal entry is:

Account age Balance Estimated uncollectible % Amount uncollectible Current 96000 1% 960 1-30 64000 3.50% 2240 31-60 16000 12% 1920 61-90 6500 42% 2730 >90 3200 67% 2144 Estimated uncollectible 9994

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