Company has the following unadjusted account balances at December 31, of the cur

Question

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 $ 1,600. This company uses the aging, of accounts receivable method 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 11 current year balance sheet. Prepare the adjusting journal entry to record had debts expense for the current year. Calculations: Adjusting Entry:

Explanation / Answer

Account age Balace Estimated uncollectible percentage Allowance for doubtful Account Current (Not yet due)            96,000 1.00%                  960 1-30 days past due            64,000 3.50%               2,240 31-60 Days Past due            16,000 12.00%               1,920 61-90 days              6,500 42.00%               2,730 Over 90 Days Past due              3,200 67.00%               2,144 Total        1,85,700               9,994 Debit Baddebts expenses 8,394 (9,994-1,600) Credit Allowance for doubtful accounts 8,394

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