Question 4 Unsaved Alpha Company uses aging to estimate uncollectibles. At the e

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Question 4 Unsaved
Alpha Company uses aging to estimate uncollectibles. At the end of the fiscal year, December 31, 2016, Accounts Receivable has a balance that consists of:

Dollar Value

Age of Account

Estimated Collectible

$115,000

< 30 days old

98%

85,000

30 to 60 days old

80%

50,000

61 to 120 days old

50%

10,000

> 120 days old

15%

The current unadjusted Allowance for Uncollectable Accounts balance is a credit balance of $3,500 and the Bad Debt Expense accounts has an unadjusted balance of zero. After the adjusting entry is made, what will be the dollar balances in the:

1. Accounts Receivable

2. Allowance for Doubtful Accounts

3. Bad Debt Expense

Explanation / Answer

Dollar Value Age Estimated Collectible Allowance 115000 < 30 days old 98% 2300 85000 30 to 60 days old 80% 17000 50000 61 to 120 days old 50% 25000 10000 > 120 days old 15% 8500 260000 52800 1 Accounts Receivable $260000 2 Allowance for Doubtful Accounts $52800 3 Bad Debt Expense $49300(52800-3500)

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