Question

(a) Determine the amount estimated to be uncollectible by completing the aging of receivables schedule. Round calculations to the nearest dollar. ​ Est. Uncollectible Accounts Age Interval Balance Percentage Amount Not past due $550,000 2.50% ​ 1—30 days past due 96,500 4.00% ​ 31—60 days past due 43,750 9.50% ​ 61—90 days past due 22,250 16.00% ​ 91—180 days past due 5,600 31.00% ​ 181—365 days past due 3,100 60.00% ​ Over 365 days past due 1,250 95.00% ​ Total $722,450 ​ ​ ​ (b) If the Allowance for Doubtful Accounts has a credit balance of $9,700, record the adjusting entry for the bad debt expense for the year. (c) If the Allowance for Doubtful Accounts has a debit balance of $9,700, record the adjusting entry for the bad debt expense for the year.

Answer 1

To calculate the estimated uncollectible accounts, percentages are multiplied by the balances for each age interval, providing a total estimated uncollectible amount of $29,610. For part (b), the adjusting entry requires debiting Bad Debt Expense for $19,910, and for part (c), debiting it for $39,310.

Step-by-step explanation:

To determine the estimated amount that is uncollectible, we apply the given percentages to the respective age intervals of accounts receivables. Here are the calculations rounded to the nearest dollar:

• Not past due: $550,000 × 2.5% = $13,750
• 1—30 days past due: $96,500 × 4% = $3,860
• 31—60 days past due: $43,750 × 9.5% = $4,156
• 61—90 days past due: $22,250 × 16% = $3,560
• 91—180 days past due: $5,600 × 31% = $1,736
• 181—365 days past due: $3,100 × 60% = $1,860
• Over 365 days past due: $1,250 × 95% = $1,188

Adding these amounts gives us the total estimated uncollectible accounts of $29,610.

For part (b), the adjusting entry when the Allowance for Doubtful Accounts has a credit balance of $9,700 is:

• Bad Debt Expense: $29,610 - $9,700 = $19,910 (debit)
• Allowance for Doubtful Accounts: $19,910 (credit)

For part (c), the adjusting entry when the Allowance for Doubtful Accounts has a debit balance of $9,700 is:

• Bad Debt Expense: $29,610 + $9,700 = $39,310 (debit)
• Allowance for Doubtful Accounts: $39,310 (credit)

Answer 2

• (b) If the Allowance for Doubtful Accounts has a credit balance of $9,700, record the adjusting entry for the bad debt expense for the year.

Dr Bad Debt Expense $ 20,410

Cr Allowance for Uncollectible Accounts $ 20,410

• (c) If the Allowance for Doubtful Accounts has a debit balance of $9,700, record the adjusting entry for the bad debt expense for the year.

Dr Bad Debt Expense $ 39,810

Cr Allowance for Uncollectible Accounts $ 39,810

Step-by-step explanation:

$550,000 2,5% $13,750 Not Past Due

$96,500 4,0% $3,860 Past Due 1-30 days

$43,750 9,5% $4,156 Past Due 31-60 days

$22,250 16,0% $3,560 Past Due 61-90 days

$5,600 31,0% $1,736 Past Due 91-180 days

$3,100 60,0% $1,860 Past Due 181-365 days

$1,250 95,0% $1,188 Past Due Over 365 days

$722,450 $30,110

• (b) If the Allowance for Doubtful Accounts has a credit balance of $9,700, record the adjusting entry for the bad debt expense for the year.

Dr Bad Debt Expense $ 20,410

Cr Allowance for Uncollectible Accounts $ 20,410

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of estimated value.

Because the company already has a CREDIT balance ($9,700) in the Allowance for Doubtful Accounts it's necessary to register an entry that complement ($20,410) the existing value and reflect the value ($30,110) as % of account receivable.

• (c) If the Allowance for Doubtful Accounts has a debit balance of $9,700,

record the adjusting entry for the bad debt expense for the year.

Dr Bad Debt Expense $ 39,810

Cr Allowance for Uncollectible Accounts $ 39,810

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of estimated value.

Because the company already has a DEBIT balance ($9,700) in the Allowance for Doubtful Accounts it's necessary to register an entry that compensate ($39,810) the existing value and reflect the value ($30,110) as % of account receivable.