Adventure Company uses the aging of accounts receivable method to estimate Bad D

Question

Adventure Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 30-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 2%, (2) 13%, and (3) 39%, respectively. At December 31, 2016, the unadjusted credit balance in the Allowance for Doubtful Accounts was $110. The total Accounts Receivable in each age category were: (1) 1-30 days old, $72,000, (2) 30-90 days old, $13,000, and (3) more than 90 days old, $5,000.
A. Calculate the estimate of uncollectible accounts at December 31, 2016.
B. Prepare the appropriate adjusting entry dated December 31, 2016. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Problem 8-214 [LO 8-2 Adventure Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The nce of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 30-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 296 (2) 13%, and (3) 39%, respectively. At December 31, 2016, the unadjusted credit balance in the Allowance for Doubtful Accounts was $110. The total Accounts Receivable in each age category were: (1) 1-30 da old, $13,000 and (3) more than 90 ays old, $5,00.0 ys old, $72,000, (2) 30-90 Required a. Calculate the estimate of uncollectible accounts at December 31, 2016 b. Prepare the appropriate adjusting entry dated December 31, 2016. (f no entry is required for a transaction/event, select"No Journal Entry Required" in the first account field.) View transaction list : FI F2 FS F7

Explanation / Answer

A. Calculate the estimate of uncollectible accounts at December 31, 2016.

B. Prepare the appropriate adjusting entry dated December 31, 2016. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Days Amount percentage Estimated uncollectible amounts 1-30 days 72000 2% 1440 31-90 days 13000 13% 1690 More than 90 days 5000 39% 1950 Total 5080

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