Ingles Company has accounts receivable of $93,100 at March 31. An analysis of the accounts shows the information.
Month of Sale Balance, March 31
March .....................$60,000
February .................. 17,600
January .................... 8,500
Prior to January .......... 7,000
$93,100
Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is as follows.
Estimated Percentage
Age of Accounts Uncollectible
1-30 days.................... 2.0%
31-60 days.................. 5.0%
61-90 days.................. 30.0%
Over 90 days................ 50.0%
Instructions
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31 to record bad debts expense.