Explain to which accout it needs to go to First Question The aging of Torme Desi

Question

Explain to which accout it needs to go to

First Question The aging of Torme Designs' accounts receivable is shown below (a) Calculate the amount of each periodicity range that is deemed to be uncolectible. Round your answers to two decimal píaces. Age Interval Amount Percentage 3.50% 5.00 10.00 20.00 Balance No: past due 1-30 days pas: due 31-60 days past duc 21,750 61-80 days past due 11250 91-180 days past due 5,065 181-365 days past due 2,500 Over 365 days past due 1,145 Total 5850,000 Age Interval Balance Percentage Amount 47,500 $850,000 3.50% Not past due 1-30 days past due 31-60 days past due 21,750 10.00 61-90 days past due 11250 20.00 91-180 days past du 5,065 30.00 181-365 days past due 2,500 50.00 Over 365 days past due 1,145 95.00 Total 7,500 5.00 30.00 50.00 95.00 5939,210 S939,210 General Journal PAGE 1 JOURNAL OATE POST, REF CEBIT CREDIT

Explanation / Answer

Solution:

First Question:

Allowance for Doubtful Account Method

Under Allowance for Doubtful Debt method, the company uses an estimate for allowance for doubtful debt by using specified method and accordingly book Bad Debt Expenses for the period.

Allowance method creates bad debts expenses before the company knows specifically which customers will not pay on the basis of prior history and prior experience.

On the basis of prior years’ experience company can reasonably estimated what percentage of sales measure will not be collected.

Part a –Calculation of Estimated Uncollectible Amount

Estimated Uncollectible Accounts

Age Interval

Balance

(A)

Percentage

(B)

Amount

(A*B)

Not past due

$850,000

3.50%

$29,750.00

1-30 days past due

$47,500

5%

$2,375.00

31-60 days past due

$21,750

10%

$2,175.00

61-90 days past due

$11,250

20%

$2,250.00

91-180 days past due

$5,065

30%

$1,519.50

181-365days past due

$2,500

50%

$1,250.00

Over 365 days past due

$1,145

95%

$1,087.75

Total

$939,210

$40,407.25

Part b – Journal Entry

e will first identify the accounts that will be used in this question and the amount.

Uncollectible Amount = $40,407.25

The entry would be added to that balance, making adjusted balance $40,407.25

The following entry is to be passed to book Bad Debt Expense:

Date

General Journal

Debit

Credit

Bad Debt Expense

$40,407.25

Allowance for Doubtful Accounts

$40,407.25

Note ---- I have solved the first question…since the images are clubbed with each other, it is not clear how many parts are in the first question… In case more parts are there other than above… please let me know I will provide you the solution for rest parts..

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Estimated Uncollectible Accounts

Age Interval

Balance

(A)

Percentage

(B)

Amount

(A*B)

Not past due

$850,000

3.50%

$29,750.00

1-30 days past due

$47,500

5%

$2,375.00

31-60 days past due

$21,750

10%

$2,175.00

61-90 days past due

$11,250

20%

$2,250.00

91-180 days past due

$5,065

30%

$1,519.50

181-365days past due

$2,500

50%

$1,250.00

Over 365 days past due

$1,145

95%

$1,087.75

Total

$939,210

$40,407.25

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