Determine the total estimated uncollectibles

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Reference no: EM13531650

Parry Company has accounts receivable of $95,400 at March 31, 2012. An analysis of the accounts shows these amounts.


Balance, March 31

Month of Sale

2012

2011

March

$65,000

$75,000

February

12,900

8,000

December and January

10,100

2,400

November and October

7,400

1,100


$95,400

$86,500

Credit terms are 2/10, n/30. At March 31, 2012, there is a $2,100 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage of receivables basis for estimating uncollectible accounts. The company"s estimates of bad debts are as shown below.


Estimated Percentage

Age of Accounts

Uncollectible

Current

2%

1-30 days past due

5

31-90 days past due

30

Over 90 days past due

50

Instructions

(a) Determine the total estimated uncollectibles.

(b) Prepare the adjusting entry at March 31, 2012, to record bad debts expense.

(c) Discuss the implications of the changes in the aging schedule from 2011 to 2012.

Reference no: EM13531650

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