Exercise 8-4 Menge Company has accounts receivable of $108,000 at March 31 Avera

Question

Exercise 8-4 Menge Company has accounts receivable of $108,000 at March 31 Average Age Balance, of Receivables Month of Sale March February January Prior to January March 31 $64,800 25,200 9,600 8,400 108,000 Outstanding 16 days 48 days 73 days 110 days Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,400 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is shown below Age of Accounts 1-30 days 31-60 days 61-90 days Over 90 days Estimated Percentage Uncollectible 2.0% 7.0% 22.0% 50.0% Determine the total estimated uncollectibles. Total estimated uncollectibles Prepare the adjusting entry at March 31 to record bad debt expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Mar. 31

Explanation / Answer

Total estimated uncollectibles=(64800*2%)+(25200*7%)+(9600*22%)+(8400*50%)= $9372 Bad debts expense 7972 =9372-1400 Allowance for Doubtful accounts 7972

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