Determining estimated uncollectible and adjusting entry
has accounts receivable of $98,100 at March 31. An analysis of the accounts
shows the following.
Month of Sale Balance, March
March $ 65,000
Prior to January 7,000
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
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.