Daley Company estimates uncollectible accounts using the allowance method at Dec

Question

Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.

a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $4,300 credit.
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $800 debit.

Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 605,000 $ 403,000 $ 97,000 $ 43,000 $ 25,000 $ 37,000 Percent uncollectible 2 % 3 % 6 % 8 % 11 % Req AReq B and C Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method. Accounts Receivable Percent Uncollectible (%) Not due 1 to 30: 31 to 60: 61 to 90: Over 90 Estimated balance of allowance for uncollectibles

Explanation / Answer

a.

b. Beginning balance in the Allowance for Doubtful Accounts = 4,300

ADD : Allowance for uncollectible (plug) = 15,320

Ening balance in the Allowance for Doubtful Accounts = 19,620

JOURNAL ENRTY

c. Unadjusted debit balance in the Allowance for Doubtful Accounts = 800

ADD : Ening balance in the Allowance for Doubtful Accounts = 19,620

Allowance for uncollectible = 20,420

JOURNAL ENTRY

Accounts Receivable (a) Percentage Uncollectible (%) (b) Amount (c) = (a*b) Not due 403,000 2% 8,060 1 to 30 97,000 3% 2,910 31 t0 60 43,000 6% 2,580 61 to 90 25,000 8% 2,000 Over 90 37,000 11% 4,070 Estimated balance of allowance for uncollectibles 19,620

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