A/R problem using the agind method The A/R Account had a 45,000 debit balance on

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A/R problem using the agind method

The A/R Account had a 45,000 debit balance on Jan 1.

The Allowance for doubful Accounts had a 4,000 credit balance on Jan 1.

Credit sale Rev reported each month

225,000 in Jan    290,000 in Feb

Cash Collection from A/R customers each month

210,000 in Jan   276,350 in Feb

Write-offs of uncollectible accounts in each monht were:

3,800 written off in Jan    6,100 written off in Feb

A/R Account Balance at end of each monht

56,250 on Jan 31    63,800 on Feb 28

The Aging A/R Schedule

Jan 1-30 Days 32,500 .5%     31-60 Days 11,000 3% 61-90 days 9,500 12% over 90 3,250 35%

Feb 1-30 Days 35,000 .5%     31-60 Days 16,000 3%   61-90 Days 10,500 12% Over 90 2,300 35%

Assume the company uses the aging method to estimate its bad debts.

1. Prepare the adj JE for estimated bad debt ex as of Jan 31 and Feb 28

2.Show the t accounts for the allowanc for doubtful accounts as for Jan and Feb.

3.Show the Balance Sheet Presentation for A/R as of Jan 31 and Feb 28.

Hint: for 3. the balance presentation must show the net A/R this is the A/R balance less the allowance balance. You must find the ending Allowancebalance in 2.

Explanation / Answer

Jan

1-30 Days = 32,500 .5% = 162.5

31-60 Days = 11,000 3% = 330

61-90 days = 9,500 12% = 1140

over 90 = 3,250 35% = 1137.5

Total = 2770

Feb

1-30 Days = 35,000 .5% = 175

31-60 Days =16,000 3% = 480

61-90 Days =10,500 12% = 1260

Over 90 =2,300 35% = 805

Total = 2720

accounts for the allowanc for doubtful accounts as for Jan and Feb = 2770+2720 = 5490

A/R as of Jan 31 and Feb 28 = 53480 and 61080

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