Problem 2-Receivable Analysis You must show all your work im tie L W Company use

Question

Problem 2-Receivable Analysis You must show all your work im tie L W Company uses the aging of receivables methed to acczunt for douittul accounts. On Decemiber 3 aczunts. On December 32, 2027, W has 3,000,000 in sales and S0%ofthese sales were into the following categories ash.AttheendofDecenbetwcassfiedtsa rumsreceivable Category #1 Category #2 Category #3 Not Yet Due Up to 130 days past due More than 180 days pastdue $300000 s3000 $24000 uncollectible rate: 2% uncollecitierate: 4% In addition, W has a $1,000 credit balance in its ailewance for doubcful account Question 1: What is the ending balance of W's aillowance for douibeial account as of the end of December? And based on the information given, what is the met realicable vallue of W's accounts receskabile Ogts Question 2: What is the amount that W should report as its estimated bad debt expenses as of the end of December? And what journal entry should W record? (2pts Page 8122

Explanation / Answer

1. Calculation of Allowance

Cateogry 1 = 300000*1% = 3000

Cateogry 2 = 8000*2% = 160

Cateogry 3 = 24000*4% = 960

Total Allowance at the end = 4120

Net realizable value = credit sales - Allowance

= 3000000*50% - 4120

= 1495880

2. Estimated Bad debts = total allowance - opening allowance

= 4120 - 1000 = 3120

Bad Debts A/c dr 3120

  to Allowance for Doubtful A/c 3120

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