A Company Uses the Aging of Accounts Receivable Method to Estimate

question 86

Essay

A company uses the aging of accounts receivable method to estimate its bad debts expense.On December 31 of the current year,an aging analysis of accounts receivable revealed the following:
$\begin{array}{|r|l|c|}\hline\text { Accounts } & & \text { Estimated } \\\text { Receivable } & \text { Account Age } & \text { Uncollectible } \\ \hline \$ 620,000 & \text { Not due yet } & 0.5 \% \\\hline 270,000 & 1-30 \text { days overdue } & 2.0 \\\hline 145,000 & 31-60 \text { days overdue } & 8.0 \\\hline 55,000 & 61-90 \text { days overdue } & 20.0 \\\hline 32,000 & 91-120 \text { days overdue } & 50.0 \\\hline 18,000 & \text { Over } 120 \text { days overdue } & 70.0 \\\hline \$ 1,140,000 & \text { Total } & \\\hline\end{array}$

Required:
a.Calculate the amount of the allowance for doubtful accounts that should be reported on the current year-end balance sheet.
b.Calculate the amount of the bad debts expense that should be reported on the current year's income statement,assuming that the balance of the allowance for doubtful accounts on January 1 of the current year was $44,000 and that accounts receivable written off during the current year totaled $49,200.
c.Prepare the adjusting journal entry to record bad debts expense on December 31 of the current year.
d.Show how accounts receivable will appear on the current year-end balance sheet as of December 31.

Identify the objectives of employee orientation and the role of socialization in integrating new hires into the organization.

Understand the effects of economic conditions and external factors on performance measurements and compensation.

Understand the influence of performance-based compensation systems on employee motivation and organizational effectiveness.

Differentiate between various types of compensation and benefits, including base pay, merit pay, bonuses, stock options, and gain-sharing.

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Definitions:

Recognizes

To formally acknowledge or take notice of something, often legally or officially.

Partnership

A lawful business structure involving two or more people who divide both management responsibilities and earnings.

Entity

A unit, existence, or being that can be legally or conceptually distinct, such as a corporation, partnership, individual, or any organized group.

Lawn Care Service

A business specialized in maintaining and grooming outdoor landscapes, primarily focusing on lawns and garden areas.