[The following information applies to the questions displayed below.] Jarden Com
ID: 2559696 • Letter: #
Question
[The following information applies to the questions displayed below.]
Jarden Company has credit sales of $2,800,000 for year 2017. On December 31, 2017, the company’s Allowance for Doubtful Accounts has an unadjusted credit balance of $19,860. Jarden prepares a schedule of its December 31, 2017, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here.
2. Prepare the adjusting entry to record bad debts expense at December 31, 2017.
Accounts Receivable Age of
Accounts Receivable Expected Percent
Uncollectible $ 560,000 Not yet due 1.20 % 224,000 1 to 30 days past due 1.95 44,800 31 to 60 days past due 6.45 22,400 61 to 90 days past due 32.50 4,480 Over 90 days past due 67.00
Explanation / Answer
Balance (a) Age of outstanding Estimated percentage Uncollectible (b) Estimated uncollectible (c= a*b) $ 560,000 Not yet due 1.20% $ 6,720 $ 224,000 1 to 30 days 1.95% $ 4,368 $ 44,800 31 to 60 days 6.45% $ 2,890 $ 22,400 61 to 90 days 32.50% $ 7,280 $ 4,480 over 91 days 67.00% $ 3,002 Total estimated uncollectible $ 24,259 Bad debt expense ($24,259 - $19,860) $ 4,399 Allowance for doubtful accounts $ 4,399
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