Determining estimated uncollectible and adjusting entry
Discipline: Business Studies
Type of Paper: Business plan
Academic Level: High school
Paper Format: APA
Question
Leland Company
has accounts receivable of $98,100 at March 31. An analysis of the accounts
shows the following.
Month of Sale Balance, March
31
March $ 65,000
February 17,600
January 8,500
Prior to January 7,000
$ 98,100
Credit terms are 2/10, n/30.
At March 31, Allowance for Doubtful Accounts has a credit balance of $1,200
prior to adjustment. The company uses the percentage of receivables basis for
estimating uncollectible accounts. The company's estimate of bad debts is as
follows.
Estimated Percentage Age of
Accounts Uncollectible
1-30 days 2.0%
30-60 days 5.0%
60-90 days 30.0%
Over 90 days 50.0%
(a) Determine the total
estimated uncollectibles.
(b) Prepare the adjusting entry at March 31 to record bad debts expense.
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