Xanadu Ltd. has accounts receivable totalling $142,800 and a $3,640 credit balance in its allowance for doubtful

Question:

Xanadu Ltd. has totalling $142,800 and a $3,640 credit balance in its allowance for doubtful accounts prior to adjustment on December 31, 2011. The company uses an aging analysis of its receivables as the basis for estimating its uncollectible accounts.
The aging analysis shows the following:
Month of SaleAccounts Receivable on Dec. 31
December…………………………… $ 91,000
November…………………………… 26,040
September and October…………….. 16,800
July and August…………………….. 8,960
$142,800
The company's estimates of bad debts are as follows:
Age of AccountsEstimated % Uncollectible
Current…………………………… 2%
1-30 days past due………………..12%
31-90 days past due……………….25%
Over 90 days past due…………….40%
Required:
a. Determine the total estimated uncollectibles as at December 31.
b. Prepare the adjusting entry for the expected bad debts expense as at December 31, 2011. Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...