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Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. Days Past Due Total 0
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. |
Days Past Due | |||||||||||||||||||
Total | 0 | 1 to 30 | 31 to 60 | 61 to 90 | Over 90 | ||||||||||||||
Accounts receivable | $ | 570,000 | $ | 396,000 | $ | 90,000 | $ | 36,000 | $ | 18,000 | $ | 30,000 | |||||||
Percent uncollectible | 1 | % | 2 | % | 5 | % | 7 | % | 10 | % |
a. | Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 4.5% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method. |
b. | Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $12,000 credit and $1,000 debit. |
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