Calculating the balance in fortini allowance

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Reference no: EM133079811

Question - Fortini Corporation had record sales in 2020. It began 2020 with an Accounts Receivable balance of $675,000 and an Allowance for Doubtful Accounts of $41,000. Fortini recognized credit sales during the year of $5,675,000 and made monthly adjusting entries equal to 0.6% of each month's credit sales to recognize bad debt expense. Also during the year the company wrote off $45,500 of accounts that were deemed to be uncollectible, although one customer whose $7,000 account had been written off surprised management by paying the amount in full in late September. Including this surprise receipt, $5,703,500 cash was collected on account in 2020.

In preparation for the audited year-end financial statements, the controller prepared the following aging listing of the receivables at December 31, 2020:

 

Balance

Percentage estimated to be uncollectible

0-30 days outstanding

$385,000

2%

31-60 days outstanding

$109,000

10%

61-90 days outstanding

$47,000

15%

Over 90 days outstanding

$67,000

20%

Required - Prepare a schedule calculating the balance in Fortini's Allowance for Doubtful Accounts at December 31, 2021. Prepare any necessary journal entry at year end to adjust the allowance for doubtful accounts to the required balance.

Reference no: EM133079811

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