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 of Receivables Balance, Month of Sale March 31 Outstanding March February January Prior to January $64,800 25,200 9,600 8,400 108,000 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 Estimated Percentage Age of Accounts 1-30 days 31-60 days 61-90 days Over 90 days Uncollectible 2.096 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.) Debit Credit Date Account Titles and Explanation Mar. 31 Bad Debt E lowance for Doubtful

Explanation / Answer

Calculate total estimated uncollectibles :

Total estimated uncollectibles = $9372

Adjusting entry :

1-30 days 64800 2% 1296 31-60 days 25200 7% 1764 61-90 days 9600 22% 2112 Over 90 days 8400 50% 4200 Total 9372

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