A Company Has the Following Unadjusted Account Balances at December

question 112

Essay

A company has the following unadjusted account balances at December 31,of the current year: Accounts Receivable of $185,700 and Allowance for Doubtful Accounts of $1,600 (credit balance).This company uses the aging of accounts receivable to estimate its bad debts.The following aging schedule reflects its accounts receivable at the current year-end:
$\begin{array}{|l|r|r|}\hline && \text {Estimated}\\&& \text {Uncollectible}\\\hline \text { Account Age}& \text { Balance }& \text { Percentage }\\\hline \text { Current (not yet due) } & \$ 96,000 & 1.0 \% \\\hline 1-30 \text { days past due } & 64,000 & 3.5 \\\hline 31-60 \text { days past due } & 16,000 & 12.0 \\\hline 61-90 & 6,500 & 42.0 \\\hline \text { Over } 90 \text { days past due } & 3,200 & 67.0\\\hline \text { Total } & \$ 185,700 \\\hline\end{array}$
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:

Attachment

The positive emotional bond that develops between a child and a particular individual.

Sacred Entity

A sacred entity is anything considered to be holy, divine, or of religious importance, deserving veneration.

Preoperational Intuitive

A stage in Piaget's theory of cognitive development, where children aged 2 to 7 years exhibit egocentric thinking and use symbols to represent the world.

Concrete Operational

Refers to a stage in Piaget's theory of cognitive development where children aged 7 to 12 start thinking logically about concrete events, but struggle with abstract concepts.