Written Assignment - " Please site all resources and or references used".
A company uses the aging of accounts receivable method to estimate its bad debts expense. On December 31 of the current year, an aging analysis of accounts receivable revealed the following:
|
Accounts Receivables
|
The Account Age
|
Estimated Uncollectible
|
| $620,000 |
Not due yet
|
1%
|
| 270,000 |
1-30 days overdue
|
5
|
| 145,000 |
31-60 days overdue
|
10
|
| 55,000 |
61-90 days overdue
|
30
|
| 32,000 |
91-120 days overdue
|
40
|
| 18,000 |
Over 120 days overdue
|
60
|
|
Total of 1,140,000
|
|
|
Using the information in the chart above, complete the following:
1. Calculate the amount of the Allowance for doubtful accounts that should be reported on the current year-end balance sheet.
2. Calculate the amount of the Bad Debts Expense that should be reported on the current year's income statement, assuming that the balance of the Allowance for Doubtful Accounts on January 1 of the current year was $50,000 and that accounts receivable written off during the current year totaled $55,000.
3. Prepare the adjusting entry to record bad debts expense on December 31 of the current year.
4. Show how Accounts Receivable will appear on the current year-end balance sheet as of December 31.