Question
Jarden Company has credit sales of $2,200,000 for year 2017. On December 31, 2017, the companys Allowance for Doubtful Accounts has an unadjusted credit balance
Jarden Company has credit sales of $2,200,000 for year 2017. On December 31, 2017, the companys Allowance for Doubtful Accounts has an unadjusted credit balance of $13,112. Jarden prepares a schedule of its December 31, 2017, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here.
December 31, 2017 Accounts Receivable | Age of Accounts Receivable | Expected Percent Uncollectible | ||
$ | 440,000 | Not yet due | 1.00 | % |
176,000 | 1 to 30 days past due | 1.75 | ||
35,200 | 31 to 60 days past due | 6.25 | ||
17,600 | 61 to 90 days past due | 31.50 | ||
3,520 | Over 90 days past due | 65.00 | ||
1. Estimate the required balance of the Allowance for Doubtful Accounts at December 31, 2017, using the aging of accounts receivable method.
2. Prepare the adjusting entry to record bad debts expense at December 31, 2017.
Accounts Receivable Percent Uncollectible (#.##%) Estimated Uncollectible Not due: X 1 to 30: = 31 to 60: X 61 to 90: 11 Over 90: Estimated balance of allowance for uncollectiblesStep by Step Solution
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