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Carmack Company has credit sales of 2.6 million during the year 2011. On December 31, 2011, the company's Allowance for Doubtful Accounts consists of an unadjusted credit balance of $13,400. Carmack makes a schedule of its December 31, 2011, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category which will become uncollectible. This information is sum up here.

December 31, 2011 Age of Accounts Receivable Expected Percent Uncollectible

$730,000 Not yet due 1.25%

354,000  1 to 30 days past due 2.00

76,000 31 to 60 days past due 6.50

48,000  61-90 days past due 32.75

12,000 Over 90 days past due 68.00

Required:

1) Estimate the required balance of the allowance for doubtful accounts at December 31, 2011, by using the adding of accounts receivable method.

2) Make the adjusting entry to record bad debts expenditures at December 31, 2011

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M919207

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