Twilight Company Uses the Aging of Accounts Receivable Method to Estimate

question 155

Essay

Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense.The balance of each account receivable is aged on the basis of three categories as follows: (1)1-30 days old,(2)31-90 days old,and (3)more than 90 days old.Based on experience,management has estimated what portion of receivables of a specific age will not be paid as follows: (1)1%,(2)15%,and (3)40%,respectively.
At December 31,2019,the unadjusted credit balance in the Allowance for Doubtful Accounts was $80.The total Accounts Receivable in each age category were: (1)1-30 days old,$52,000,(2)31-90 days old,$8,000,and (3)more than 90 days old,$3,200.
Required:
Part a.Calculate the estimate of uncollectible accounts at December 31,2019.
Part b.Prepare the appropriate adjusting entry dated December 31,2019.

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Definitions:

Permeable Rocks

Rocks that have connected spaces or pores, allowing fluids to pass through them, critical in the study of groundwater flow and hydrocarbon reservoirs.

Faults and Fractures

Breaks in the Earth's crust where blocks of the crust have moved relative to each other due to tectonic forces.

Ore

A rock, sediment, or other material that can be mined for a profit.

Mineral Deposit

Concentrated accumulations of minerals from which economically valuable materials can be extracted.