A company uses th aging of accounts receivable method approach to estimate its bad debts expense. On Dec 31, of the current year an aging analysis of accounts receivable revealed the following:
Accounts Receivable Account Age Estimated Uncollectible Estimated Bad debt
- $620,000 Not due yet 0.5% 3,100
- 270,000 1-30 days overdue 2.0 5,400
- 145,000 31-60 days overdue 8.0 11,600
- 55,000 61-90 days overdue 20.0 11,000
- 32,000 91-120 days overdue 50.0 16,000
- 18,000 Over 120 days overdue 70. 0 12,600
$1,140,000 Total 59,700 total estimated bad debt "Highlighted area is what I've done. It's not much.
Required:
a. Calculate the amount of the allowarnce for Doubtful Accounts that should be reported of 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 Jan 1 of the current year was $44,000 and that accounts receivable written off durring the current year totaled $49,200.
c. Prepare the adjusting journal entry to record bad debts expense on Dec 31 of the current year.
d. show how account receivable will appear on the current year-end balance sheet as of Dec 31.