Question: Menge Company has accounts receivable of $115,800 at March 31.
|
Month of Sale
|
|
Balance,
March 31
|
|
Average Age
of Receivables
Outstanding
|
| March |
|
$75,700 |
|
16 |
days |
| February |
|
22,200 |
|
48 |
days |
| January |
|
9,100 |
|
73 |
days |
| Prior to January |
|
8,800 |
|
110 |
days |
|
|
115,800 |
|
|
|
Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,500 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is shown below.
| Age of Accounts |
|
Estimated Percentage
Uncollectible
|
| 1-30 days |
|
4.0% |
| 31-60 days |
|
5.0% |
| 61-90 days |
|
20.0% |
Over 90 days
|
|
55.0%
|
Prepare the adjusting entry at March 31 to record bad debt expense.