Noell Co. sells Christmas angels. Noell determines that at the end of December,
ID: 2536545 • Letter: N
Question
Noell Co. sells Christmas angels. Noell determines that at the end of December, it has the following aging schedule of Accounts Receivable:
Customer
Total
Not Yet Due
Number of Days Past Due
1–30
31–60
61–90
Over 90
DV Farmer
$5,000
$3,000
$2,000
JJ Joysen
3,000
1,000
2,000
NJ Bell
1,500
500
1,000
JC Net
2,000
2,000
11,500
3,000
3,000
2,500
2,000
1,000
% uncollectible
1%
5%
10%
20%
50%
Total Estimated Uncollectible Amounts
(a) Calculate the total estimated bad debts based on the information presented in the table.
(b) Prepare the year-end adjusting journal entry to record bad debts using the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $650 debit. Dr. Cr.
(c) Assume that the company has a policy of providing for bad debts at the rate of 1% of sales, with Sales for 2008 being $55,000. Prepare the adjusting entry for bad debts under the percentage of sales basis. Dr. Cr.
Customer
Total
Not Yet Due
Number of Days Past Due
1–30
31–60
61–90
Over 90
DV Farmer
$5,000
$3,000
$2,000
JJ Joysen
3,000
1,000
2,000
NJ Bell
1,500
500
1,000
JC Net
2,000
2,000
11,500
3,000
3,000
2,500
2,000
1,000
% uncollectible
1%
5%
10%
20%
50%
Total Estimated Uncollectible Amounts
Explanation / Answer
SOLUTION
(A)
(B)
(C)
Amount ($) 11,500 3,000 3,000 2,500 2,000 1,000 % Uncollectible 1% 5% 10% 20% 50% Total estimated Uncollectible amounts 1,330 30 150 250 400 500Related Questions
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