1.)The ledger of Costello Company at the end of the current year shows Accounts

Question

1.)The ledger of Costello Company at the end of the current year shows Accounts Receivable $132,000, Sales Revenue $859,000, and Sales Returns and Allowances $31,000.

If Costello uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Costello determines that L. Dole’s $2,400 balance is uncollectible. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31

Age of Accounts

Balance,
March 31

Estimated Percentage
Uncollectible

(a)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31

2.)Menge Company has accounts receivable of $115,800 at March 31. Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,500 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is shown below.

Age of Accounts

Balance,
March 31

Estimated Percentage
Uncollectible

1–30 days $75,700 4% 31–60 days 22,200 5% 61–90 days 9,100 20% Over 90 days 8,800 55% 115,800

(a)

Determine the total estimated uncollectibles.
Total estimated uncollectibles $

Explanation / Answer

1) Direct method Date Account titles & Explanations Debit Credit 31-Dec Bad debts expense 2,400 Accounts receivable 2,400 2) a) Total estimated uncollectibles Age of bal Estimated Estimated accounts 31-Mar % bad debts 1--30 75,700 4% 3028 31--60 22,200 5% 1110 61--90 9,100 20% 1820 over 90 8,800 55% 4840 total 10798 total estimated uncollectibles 10,798

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