Required information Problem 9-3A Aging accounts receivable and accounting for b

Question

Required information

Problem 9-3A Aging accounts receivable and accounting for bad debts LO P2, P3

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Jarden Company has credit sales of $3,100,000 for year 2017. On December 31, 2017, the company’s Allowance for Doubtful Accounts has an unadjusted credit balance of $19,564. 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.

Problem 9-3A Part 1

Required:
1. Estimate the required balance of the Allowance for Doubtful Accounts at December 31, 2017, using the aging of accounts receivable method.
  

Problem 9-3A Part 2

2. Prepare the adjusting entry to record bad debts expense at December 31, 2017.

December 31, 2017
Accounts Receivable Age of
Accounts Receivable Expected Percent
Uncollectible $ 620,000 Not yet due 0.85 % 248,000 1 to 30 days past due 1.60 49,600 31 to 60 days past due 6.10 24,800 61 to 90 days past due 30.75 4,960 Over 90 days past due 64.00

Explanation / Answer

1.

2.

Age of Accounts Balance, Estimated Percentage Estimated Uncollectible amount (Balance * Percentage) Dec-31 Uncollectible Not yet due $620,000 0.85% $5,270.00 1–30 days $248,000 1.60% $3,968.00 31–60 days 49,600 6.10% $3,025.60 61–90 days 24,800 30.75% $7,626.00 Over 90 days 4,960 64.00% $3,174.40 947,360 $23,064

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