y to record estimated bad debes for July Regat Part 2 During ding accounts receivable ransactions and the adjustin August, total sales of $957.000 were recorded, all on credit. Sales returns and allowances 000. Collections during the month were $312.000, which included the recovery of $2.000 from sch . Count written off in a previous month. No accounts were written off during August. Tippleton Company ed its method of estimating bad debts to the balance sheet approach because the new accountants are accurately reflected uncollectible accounts. The resulting ang analysis determined to al estimated un- collectible accounts at August 31 to be $15,000. Required Prepare the August 31 adjusting entry to record estimated bad debts for August Problem 8-9A Estimating bad debts Los eXcel CHECK FIGURE: a. Total estimated uncollectible accounts $13,638 The following informations available regarding the outstanding accounts receivable of Mufa Contracting at (net) = $140,600 1. 2020, its year-end: September 30, 2020: Credit Mon of Credit Sale $1,650,000 3. Adey $35,000 $ 0 74.000 Aug. S - 1.000 9.900 $ 0 0 23.100 0 T. Holton W. NIX 16.500 12.200 15.000 5.600 A series are performed on terms of S e cony eroth try at October 31, 2020, balance sheet using your Mufu estimates bad debts using the following rates: 90 10 119 O ver 119 days past we day pant due 20% 50% 1 to 29 days30 to 55 days 60 to 89 days past due pas de paste 15 4% 10% Not yet due 0.5% Required a. Complete a Schedule of Accounts Receivable by Age at September 30, 2020 (similar to Exhibit 8.13). b. The Allowance for Doubtful Accounts showed an unadjusted balance on September 30, 2020, of $1,900. Record the adjusting entry at September 30, 2020, to estimate uncollectible accounts. 587 A Problem 8-9A Estimating bad debts LO3 excel CHECK FIGURE: a. Total estimated uncollectible accounts $13,638 The following information is available regarding the outstanding accounts receivable of Mufu Contracting at September 30, 2020: Month of Credit Sale Customer May June July Aug. Sept. B. Axley $35,000 $ 0 $ 0 $ 0 $ . T. Holton 74.000 36.000 16,500 W. Nix 23.100 0 9,900 12,200 C. Percy 5,600 15,800 -O 92,500 K. Willis "All services are performed on terms of /30. Assume all sales occurred on the last day of the month. 0 Mufu estimates bad debts using the following rates: Not yet due 0.5% 1 to 29 days30 to 59 days 60 to 89 days past due past due past due 1% 4% 10% 90 to 119 Over 119 days past due days past due 20% 50% I Required a. Complete a Schedule of Accounts Receivable by Age at September 30, 2020 (similar to Exhibit 8.13). b. The Allowance for Doubtful Accounts showed an unadjusted balance on September 30, 2020, of $1,900. Record the adjusting entry at September 30, 2020, to estimate uncollectible accounts. 587 347.500 Normally, the older ible. An acco receivable scount) GING OF ACCOUNTS RECEIVABLE llu the older the account receivable is outstandine the more likely An accounts receivable aging analysis estimates uncollectible accounts vable according to how much time has passed since they were created. Gro sends depend on the judgment of management but are often based on 30-day per collectible amounts are applied to each class and totalled to get the required ce for Doubtful Accounts. This calculation is illustrated in Exhibit 8.13 for Decor, many whose total outstanding accounts repable ober 31 were $19 . ling, the more likely that it will become uncollect- is estimates uncollectible accounts by grouping accounts passed since they were created. Grouping categories used en based on 30-day periods. Estimated rates class and totalled to get the required balance of the Allow- strated in Exhibit 8.13 for DeCor, an interior design EXHIBIT 8.13 Aging of Accounts Receivable Customer's Name Decor Schedule of Accounts Receivable by Age December 31, 2017 Not 1 to 30 31 to 60 61 to 90 Over Yet Days Days Days 90 Days Total Due Past Past Due Past Due Past DuePast Due 450 $ 450 710 $ 710 500 300 $ 200 740 $ 100 $ 640 $ Chloe Arden ......... Luca Fontana........... Jasmine Kasu.... Amy Ma.... 1.000 $49,900 810 $37,000 190 $6,500 $3,50 $1,900 $1,000 ZZ Services.... Totals Percentage Uncollectible. Estimated Uncollectible Accounts................. 500 X Notice the percent- age of estimated uncollectible receiv- ables increases with the age of the accounts to reflect the increasing risk of not collecting these accounts - - * 2% x 5% x 10% x 25% x 40% $ 2,290 $ 740 $ 325 $ 350 $ 475 $ 400 The total in the first column tells us the adjusted balance in DeCor's Allowance for Doubtful Accounts should be $2,290 (= $740 + $325 + $350 + $475 + $400). Because DeCor's allowance account as shown below has an unadjusted debit balance of $200, the required adjustment to the Allowance for Doubtful Accounts needs to be calculated as follows: Allowance for Doubtful Accounts Unadjusted balance Dec. 31 200 2,290 Desired adjusted balance Dec. 31 What adjustment is necessary to achieve the desired adjusted balance