Rainy Day Company, a wholesaler, uses the aging method to estimate bad debt losses. The following schedule of aged accounts receivable was prepared at December 31, 2013.

Age of Accounts........................................................................... Amount

0-30 days . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $478,600

31-60 days . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,300

61-90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,200

91-120 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,300

Over 120 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,300

$759,700

The following schedule shows the year-end receivables balances and uncollectible accounts experience for the previous five years.

The unadjusted Allowance for Bad Debts balance on December 31, 2013, is $25,124.
Instructions:
Compute the correct balance for the allowance account based on the average loss experience for the last five years and prepare the appropriate end-of-year adjusting entry.

Transcribed Image Text:

91-120 Days 52.1% 49.2 53.7 51.3 49.9 Over 120 Days 84.1% 80.3 82.0 78.5 85.2 31-60 Days 61-90 Days 8.7% 9.0 Year-End Year Receivables 0.3% 0.9% $780,700 750,400 681,400 698,200 723,600 2012 0.4 0.4 0.2 2010 1.0 2009 1.1