Complete Auto Supply distributes new auto parts to local dealers throughout the
ID: 2462000 • Letter: C
Question
Complete Auto Supply distributes new auto parts to local dealers throughout the Southeast. Complete Auto’s credit terms are n/30. As of the end of business on March 31st, 2016 Complete had the following Accounts Receivable outstanding:
Customer Name Due Date (2016) Amount
Little Rock Auto March 10th $5,000
Fayetteville Auto Supply January 18th 4,000
Texarkana Auto December 22, 2015 8,000
Memphis Auto Repair February 23rd 7,500
Jackson Repair & Tow April 15th 3,000
a) Determine the number of days past due for each of the preceding accounts as of March 31st. Then, complete an aging of receivables schedule.
b) Based upon past history of uncollectible accounts, Complete Auto expects to NOT collect 0.75% of not past due accounts, 8% of accounts that are 1-30 days past due, 16% of accounts that are 31-60 days past due, 45% of accounts that are 61-90 days past due, and 75% of accounts that are 91 days past due. Estimate the allowance for doubtful accounts using the aging of receivables schedule you created for part A.
c) Assume, Complete Auto has a beginning credit balance of $2,500 in the Allowance for Doubtful Account before adjustment on March 31st. Journalize the adjusting entry for uncollectible accounts as of March 31st.
Explanation / Answer
Answer a and b
Answer A
Answer B
31-03-2016
Amount ($) (A)
Due date
DPD as on 31.03.2016
Ageing
Uncollectible % (B)
Allowance for doubtfull account ($)(A)*(B)
Little Rock Auto
5000
10-03-2016
21
1 to 30 days
8%
400
Fayetteville Auto Supply
4000
18-01-2016
73
61 to 90 days
45%
1800
Texarkana Auto
8000
22-12-2015
100
above 90 days
75%
6000
Memphis Auto Repair
7500
23-02-2016
37
31 to 60 days
16%
1200
Jackson Repair & Tow
3000
15-04-2016
0
Not past due
0.75%
23
9423
Answer C
Income and statement a/c Dr. 6923 (9423-2500)
To Allowance for doubtfull a/c 6923
Answer A
Answer B
31-03-2016
Amount ($) (A)
Due date
DPD as on 31.03.2016
Ageing
Uncollectible % (B)
Allowance for doubtfull account ($)(A)*(B)
Little Rock Auto
5000
10-03-2016
21
1 to 30 days
8%
400
Fayetteville Auto Supply
4000
18-01-2016
73
61 to 90 days
45%
1800
Texarkana Auto
8000
22-12-2015
100
above 90 days
75%
6000
Memphis Auto Repair
7500
23-02-2016
37
31 to 60 days
16%
1200
Jackson Repair & Tow
3000
15-04-2016
0
Not past due
0.75%
23
9423
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