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 | $ | 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. |
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
Auditing Cases An Interactive Learning Approach
Authors: Steven M Glover, Douglas F Prawitt
4th Edition
0132423502, 978-0132423502
