Daley Company prepared the following aging of receivables analysis at December 31. Total Days Past Due 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 595,000 $ 401,000 $ 95,000 $ 41,000 $ 23,000 $ 35,000 Percent uncollectible 3% 4% 7% 9% 12% Exercise 7-15 (Algo) Percent of receivables method LO P3 a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 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 $12,500 credit. c. 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 $1,500 debit.

Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 5% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method.

Estimated balance of allowance for uncollectible

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 $12,500 credit.

c. 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 $1,500 debit.

1

Record estimated bad debts assuming that Allowance for Doubtful Accounts has a $12,500 credit balance.

2

Record estimated bad debts assuming that Allowance for Doubtful Accounts has a $1,500 debit balance.