On December 31, 2023, RCA Company’s Allowance for Doubtful Accounts had an unadjusted debit balance of $7,800. The accountant for RCA has prepared a schedule of the December 31, 2023, accounts receivable by age and, on the basis of past experience, has estimated the percentage of the receivables in each age category that will become uncollectible. This information is summarized as follows:

Required
1. Calculate the amount that should appear in the December 31, 2023, balance sheet as the Allowance for Doubtful Accounts.
2. Prepare the journal entry to record bad debt expense for 2023.

Analysis Component:
On July 31, 2024, RCA concluded that a customer’s $4,200 receivable (created in 2023) was uncollectible and that the account should be written off. What effect will this action have on RCA’s 2024 profit? Explain your answer.

Transcribed Image Text:

December 31, 2023 Accounts Receivable Age of Accounts Receivable Expected Percentage Uncollectible Not due (under 30 days) 1.75% 1 to 30 days past due 2.5 31 to 60 days past due 8.5 61 to 90 days past due Over 90 days past due $620,000 355,600 91,000 11,500 7,600 35.00 60.00