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Hachey Company has accounts receivable of $95,100 at March 31, 2007. An analysis

ID: 2378875 • Letter: H

Question

Hachey Company has accounts receivable of $95,100 at March 31, 2007. An analysis of the accounts shows these amounts.

Month of Sale                 2007        2006

March                           $65,000     $75,000

February                         12,600          8,000

Dec. & Jan.                      10,100          2,400

Nov. & Oct.                       7,400          1,100

                                          $95,100      $86,500

                    

Credit terms are 2/10, n/30. At March 31, 2007, there is a $2,200 credit balance in Allowance

for Doubtful Accounts prior to adjustment. The company uses the percentage of

receivables basis for estimating uncollectible accounts. The company

Explanation / Answer

Current 3% x $62,800 = $1,884
1-30 days past due 8% x $12,750 = $13,859
31-90 days past due 35% x $10,800 = $ 3,780
Over 90 days 53% x $7,780 = $4,123
Total estimated uncollectibles $23,646 - Answer

Since there is already a credit in the allowance acct, the adjusting entry would be for $23,646 - $2,200 = $21,446