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| Window Help ereader.chegg.com ndows Windows Marketplace Windows Media Suggested Sites See Whats Hot Weo Sice Gallery Google Apple Disney ESPN Yahool Premium Paradise Kiek .kor Releasee ounti... Problem 73B Aging accounts receivable and accounting for bad debts m Hovak Company has credit sales of S4 00,000 for year 2017. At December 31, 2017, the company's Allowance for unadjusted debit balance of $3,400, Hovak prepares a schedule it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here. ounting for of its December 31, 2017, accounts receivable by age. On the basis of past experience, ivable December 31 2017 Accounts Recelvable Age of $396.400 277 800 48.000 6.600 2.800 Accounts Recelvable Not yet due 1 to 30 days past due 31 to 60 days past aue 61 to 90 days past due Over 90 days past due Expected Percent Uncolleetible 2.0% 4.0 85 39.0 820 Required 1. Compute the required balance of the Allowance for Doubtful Accounts at December 31,2017, using the aging of accounts receivable method. 2. Prepare the adjusting entry to record bad debts expense at December 31,2017 Chock ) Dr. Bad Debos Experse,531390 All Rgtt Reserved Mar nd be coses, scared, or dipic ded r, whol" cr in pat cept for use as evce or othervise con a pasaword-prot ected webae for classroom use MacBook AirExplanation / Answer
Req 1: Estimated Uncollectible Accounts: Age-group AR balance % Bad debts Estimated Allowance required Not yet due 396400 2% 7,928 1-30 days 277800 4% 11,112 31-60 days 48000 8.5% 4,080 61-90 days 6600 39% 2,574 Over 90 days 2800 82% 2,296 Total Estimated Allowance required 27990 Req 2: bad debts expense during the year: Allowance ending balance required at end 27990 Add: Debit balance of Allowance 3400 bad debts expense during the year: 31390 Adjusting entry: Bad debts expense Dr. 31390 Allowance for Doubtful debts 31390 Req 3: Journal entry for write off: Allowance for uncollectible Account dr. 3455 Accounts reeivable 3455 The above transaction will not have an effect on the income statement as both the Accounts receivable and its contra is effected by the same.
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