Problem: Leland Company has accounts receivable of $98,100 at March 31. An analysis of the accounts shows the following.
Month of Sale Balance, March 31
March $ 65,000
February 17,600
January 8,500
Prior to January 7,000
$ 98,100
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%
30-60 days 5.0%
60-90 days 30.0%
Over 90 days 50.0%
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31 to record bad debts expense.