Answered

Discover a world of knowledge at Westonci.ca, where experts and enthusiasts come together to answer your questions. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently. Connect with a community of professionals ready to provide precise solutions to your questions quickly and accurately.

Daley Company prepared the following aging of receivables analysis at December 31. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 630,000 $ 408,000 $ 102,000 $ 48,000 $ 30,000 $ 42,000 Percent uncollectible 1 % 2 % 5 % 7 % 10 % Exercise 7-9 Percent of receivables method LO P3 a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 6% 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 $13,200 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 $2,200 debit.

Sagot :

abiolataiwo2015

Answer:

A. $14,820

B. Dr Bad Debt Expense $1,620

Cr Allowance for Doubtful Accounts $1,620

C. Dr Bad Debt Expense $17,020

Cr Allowance for Doubtful Accounts $17,020

Explanation:

a. Calculation to Estimate the balance of the Allowance for Doubtful Accounts

Using this formula

Balance of the Allowance for Doubtful Accounts=Account Receivable *Percentage Uncollectible

Let plug in the formula

Account Receivable* Percentage Uncollectible = Balance of the Allowance for Doubtful Accounts

Not due $408,000*1%=$4,080

1 to 30 $102,000*2%=$2,040

31 to 60 $48,000*5%=$2,400

61 to 90 $30,000*7%=$2,100

Over 90 $42,000*10%=$4,200

Balance of the Allowance for Doubtful Accounts $14,820

($4,080+$2,040+$2,400+$2,100+$4,200)

b. Preparation of the adjusting entry to record Bad Debts Expense

Dr Bad Debt Expense $1,620

($14,820-$13,200)

Cr Allowance for Doubtful Accounts $1,620

(Being to record Bad Debts Expense)

c. Preparation of the adjusting entry to record bad debts expense

Dr Bad Debt Expense $17,020

($14,820+$2,200)

Cr Allowance for Doubtful Accounts $17,020

(Being to record Bad Debts Expense)

Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Get the answers you need at Westonci.ca. Stay informed by returning for our latest expert advice.