James Taylor Co. has Accounts Receivable of $200,000 at February 28, 20xx. The A

Question

James Taylor Co. has Accounts Receivable of $200,000 at February 28, 20xx. The Allowance for Bad Debts has a $6,000 credit balance. The company has aged the receivables and discovered that $50,000 has not reached the due date, $80,000 is between one and sixty days past the due date and the final $70,000 is over 61 days past the due date. Make the correct end of period adjusting journal entry for bad debt expense assuming 3% of the not yet due receivables are bad; 8% of the between 1-60 day receivables are worthless and 20% of the receivables older than 61 days are worthless and calculate the company’s net accounts receivable that will be reported on the balance sheet.

Explanation / Answer

Days Amount % uncollectible Allowance required Not yet due 50000 3% 1500 1-60 days 80000 8% 6400 More than 60 days 70000 20% 14000 Total 200000 21900 Adjusting journal entry: Bad debt expense 15900 =21900-6000          Allowance for Bad Debts 15900 Net accounts receivable = 200000-21900= 178100

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.