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Estimate the balance of the allowance for doubtful accounts

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Daley Company prepared the following aging of receivables analysis at December 31.

                                                          Days Past                  Due             Total              01 to 30           31 to 60             61 to 90

Over 90 Accounts receivable            $605,000          $403,000         $97,000         $43,000        $25,000        $37,000

Percent uncollectible                          2%                     3%                  6%                 8%      11%

Problem a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 4% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method.

Problem b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $12,700 credit.

Problem c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,700 debit.

Reference no: EM132757920

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