journalize the adjusting entry at December 31, assuming bad debts are expected t
ID: 2581143 • Letter: J
Question
journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable. E8-4 Menge Company has accounts receivable of $93,100 at March 31. An analysis of the accounts shows the following information. Determine ba prepare the a bad debt expe LO 3) Month of Sale March February January Prior to January Balance, March 31 $60,000 17,600 8,500 7,000 $93,100 Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit bal- ance of $1,200 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is shown below Age of Accounts 1-30 days 31-60 days 61-90 days Over 90 days Estimated Percentage Uncollectible 2.0% 5.0% 20.0% 50.0%Explanation / Answer
1-30 days 2% * 60000 1200 31-60 days 5% *17600 880 61-90 days 30% * 8500 2550 Over 90 days 50% * 7000 3500 Total estimated uncollectibles 8130 8130-1200 credit balance 6930 required amount of adjustment Bad debt expense 6930 allowance for doubtful accounts 6930
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