Ingles Company has accountsreceivable of $93,100 at March 31. An analysis of the

Question

Ingles Company has accountsreceivable of $93,100 at March 31. An analysis of the accountsshows 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 DoubtfulAccounts has a credit balance of $1,200 prior to adjustments. Thecompany uses the percentage-of-receivables basis for estimatinguncollectible accounts. The company’s estimate of bad debtsis as follows.

Estimated Percentage

                                     AgeofAccounts                             Uncollectible

                                          1 – 30 days 2.0 %

                                        31 – 60days                                     5.0%

                                        61 – 90 days 30.0 %

                                       Over 90 days 50.0 %

Instructions

(a) Determine the total estimateduncollectibles.

(b) Prepare the adjusting entry atMarch 31 to record bad debts expense.

Explanation / Answer

Age of Accounts 1-30 31-60 61-90 >90 Uncollectible Percentage 2% 5% 30% 50% Receivables 60,000 17,600 8,500 7,000 Estimated Uncollectible 1,200 880 2,550 3,500 Total Estimated Uncollectible 8,130 Mar 31     Allowance for DoubtfulAccounts    9,330                        AccountsReceivables                              9,330

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