Answered step by step
Verified Expert Solution
Question
1 Approved Answer
3. 11 marks Orange Company uses its several years' of collections history to estimate the amount of its accounts receivable that will become uncollectible at
3. 11 marks Orange Company uses its several years' of collections history to estimate the amount of its accounts receivable that will become uncollectible at the end of each year. Orange Company has a year end of December 31, 2020. Historical records show that, based on the following accounts receivable aging at December 31, 2020, the following percentages will not be collected: Percentage Estimated Balance To Be Category Owing U ncollectible 0 to 30 days outstanding S 352,500 2% 31 to 60 days outstanding S 240,000 4% 61 to 90 days outstanding 5 75,200 8% 91 to 120 days outstanding 5 25,000 12% Over 120 days outstanding 5 22,300 22% On February 12, 2021, Orange determined that it would not be able to collect any of the account receivable owed by Grape Inc. On August 3, Grape paid Orange part of the previously written-off balance. Other information pertaining to the accounts receivable of Orange Company follows: Balance in accounts receivable at December 31, 2020 S 725,000 Unadjusted debit balance in allowance for doubtful accounts at December 31, 2020 5 6,200 Amount owing by Grape Inc. on February 12, 2021 5 1,600 Amount paid by Grape Inc. on August 3, 2021 S 520 Required: a) Prepare the necessary journal entries for Orange Company for bad debts for the 2020
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started