Question
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 | $ | 620,000 | $ | 406,000 | $ | 100,000 | $ | 46,000 | $ | 28,000 | $ | 40,000 | |||||||
| Percent uncollectible | 2 | % | 3 | % | 6 | % | 8 | % | 11 | % | |||||||||
| a. | Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 4% 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 $13,000 credit and $2,000 debit. |
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
