A Company Had the Following Items and Amounts in Its

question 215

Essay

A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
$\begin{array} { l r r } &&\text { Estimated } \\&&\text { Uncollectible } \\\text { Account Age } & \text { Balance } &\text { Percentage }\\\hline \text { Current (not yet due) } & \$ 96,000 & 1.0 \% \\1 - 30 \text { days past due } & 64,000 & 2.5 \% \\30 - 60 \text { days past due } & 16,000 & 11.0 \% \\61 - 90 \text { days past due } & 6,500 & 37.0 \% \\\text { Over } 90 \text { days past due } & \underline { 3,200 } & 70.0 \% \\\text { Total } & \underline { \$ 185,700 } &\end{array}$
1. Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet.
2. Prepare the adjusting journal entry to record bad debts expense for the current year .

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Definitions:

Highly Liquid Assets

Assets that can be easily and quickly converted into cash without significant loss in value, such as cash itself or treasury bills.

Large Withdrawals

Substantial amounts of money taken out from a bank account or investment, which can significantly impact the financial stability of the institution holding the funds.

Checking Deposits

Deposits held in bank accounts from which funds can be withdrawn without notice using checks, debit cards, or electronic transfers.

Loans

Money or items of value provided to a borrower with the expectation of future repayment plus interest.