2. Riverside Movers Inc. uses the aging method to estimate bad debt expense. At

Question

2. Riverside Movers Inc. uses the aging method to estimate bad debt expense. At the end of 2016, the company had an accounts receivable balance o allowance for doubtful accounts of $7500. The company had the following analysis of account receivable at the end of 2016 (8 marks) f $106,300 and a credit balance in the Accounts Receivable Age AmountProportion Expected to Defaul Current 1-15 days past due 16-45 days past due S 50,600 15,200 8,500 18,600 13.400 $106.300 3% 6% 22% 35% 46-90 days past due Over 90 days past due Riverside Movers Inc. has a December 31 yearend Required: a. Calculate the desired ending balance of the allowance for doubtful accounts at the end of 2016 year e the journal entry to record bad debt expense at the 2016 year end

Explanation / Answer

Calculate desired ending balance of allowance for doubtful accounts :

Desired ending balance of allowance for doubtful accounts is $10254

b) Adjusting entry :

Days Amount % uncollectible Uncollectible amount Current 50600 1% 506 1-15 days 15200 3% 456 16-45 days 8500 6% 510 46-90 days 18600 22% 4092 over 90 days 13400 35% 4690 Total 106300 10254

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