Reference no: EM133034754

Question - An analysis of the receivables as at the end of the year of Madeni Limited revealed the following Age Balance - Ksh '000 Current 3,400 1 to 30 days 1,200 31 to 60 days 2,700 61 to 90 days 2,300 91 to 120 days 1,400 121 to 180 days 700 181 to 365 days 1,000 Over 365 days 1,300 14,000 From experience, the company estimates that 1% of the current debtors will not pay, 3% of debtors between 1-30 days will not pay, 5% of the debtors between 31-60 days will not pay, 7% of the debtors between 61-90 days will not pay, 10% of the debtors between 91-120 days will not pay, 15% of the debtors between 121-180 days will not pay, 20% of the debtors between 181-365 days will not pay and 50% of the over 365 days old debtors will not pay.

Required -

a) Using the Aging Method, determine the balance of allowance for doubtful debts as at the end of the year.

b) Pass the journal entry needed. The beginning balance for the Allowance for Doubtful accounts is Ksh 1,750,000.