Bad debt for Accounts Receivable: ThreeBrothers management does not expect there

Question

Bad debt for Accounts Receivable: ThreeBrothers management does not expect there to be any change in the collectability of its credit sales related to its normal operations. ThreeBrothers uses the Accounts Receivable approach to estimate bad debts, and the aging schedule at 12/31/2017 is summarized below

Days outstanding     % of AcctsRec      Estimated % Uncollectible

0-30 days                          40%                             0.30%

30-60 days                        35%                             0.80%

60-90 days                        15%                             10.00%

>90 days                           10%                             25.00%

a. What is the year end adjusting entry to account for bad debts at the end of 2017?

(FYI, current Unadjusted trial balance shows allowance for bad debts as 20,000 at December 2017)

UPDATE: Accounts Recievable is at dr 22,500,000

Explanation / Answer

Days outstanding % of Accts Rec Accounts Receivable Estimated % Uncollectible Amount uncollectible 0-30 days 40% 9000000 0.30% 27000 30-60 days 35% 7875000 0.80% 63000 60-90 days     15% 3375000 10% 337500 >90 days 10% 2250000 25% 562500 Total 22500000 990000 a Bad debts expense 970000 =990000-20000         Allowance for Doubtful accounts 970000

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