Exercise 9-7 Percent of receivables method LO P2

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.

Journal entry worksheet Record estimated bad debts. Note: Enter debits before credits. Date General Journal Debit Credit Credit dec. 31 Record entry Clear entry View general journal