Question
Net Zero Products, a wholesaler of sustainable raw materials, estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of
Net Zero Products, a wholesaler of sustainable raw materials, 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 | $ | 115,200 | $ | 80,000 | $ | 18,000 | $ | 7,200 | $ | 4,000 | $ | 6,000 | |||||||||||
| Percent uncollectible | 1 | % | 3 | % | 5 | % | 8 | % | 11 | % | |||||||||||||
a. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable 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 $1,000 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 $100 debit.
Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method.
| |||||||||
| No | Date | General Journal | Debit | Credit |
|---|---|---|---|---|
| 1 | Dec. 31 | Bad debts expense | ||
| Allowance for doubtful accounts | ||||
| 2 | Dec. 31 | Bad debts expense | ||
| Allowance for doubtful accounts |
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