1. How much is the adjusted balance of the allowance for doubtful accounts as of December 31, 2005? 2. The necessary adjusting journal entry to adjust the allowance for doubtful accounts as of December 31, 2005 would include:
1. How much is the adjusted balance of the allowance for doubtful accounts as of December 31, 2005? 2. The necessary adjusting journal entry to adjust the allowance for doubtful accounts as of December 31, 2005 would include:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. How much is the adjusted balance of the allowance for doubtful accounts as of December 31, 2005?
2. The necessary
![Don't Let Me Down, Inc. estimates its doubtful accounts by aging its accounts receivable.
The aging schedule of accounts receivable at December 31, 2005 is presented below:
Amount
P1,264,800
691,500
Age of accounts
0 - 30 days
31-60 days
61-90 days
91 - 120 days
over 120 days
288,600
114,975
59,100
P2,418,975
Don't Let Me Down, Inc.'s uncollectible accounts experience for the past 5 years are
summarized in the following schedule:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1fac45d1-878f-40b5-a653-dfbcef3cd0ec%2F98efe4b3-2cec-4f10-aea3-32872b586ac0%2F6plzgq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Don't Let Me Down, Inc. estimates its doubtful accounts by aging its accounts receivable.
The aging schedule of accounts receivable at December 31, 2005 is presented below:
Amount
P1,264,800
691,500
Age of accounts
0 - 30 days
31-60 days
61-90 days
91 - 120 days
over 120 days
288,600
114,975
59,100
P2,418,975
Don't Let Me Down, Inc.'s uncollectible accounts experience for the past 5 years are
summarized in the following schedule:
![0 - 30
31-60
61-90
91 - 120
Over120
Year
A/R Balance
Dec. 31
P1,968,750
Days
Days
Days
Days
Days
2004
0.3%
1.8%
12%
38%
65%
2003
1,500,000
0.5%
1.6%
11%
41%
70%
2002
697,500
0.2%
1.5%
9%
50%
69%
2001
1,224,000
0.4%
1.7%
10.2%
47%
81%
2000
1,865,500
0.9%
2.0%
9.7%
33%
95%
The balance of the allowance for doubtful accounts at December 31, 2005 (before
adjustment) is P126,750.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1fac45d1-878f-40b5-a653-dfbcef3cd0ec%2F98efe4b3-2cec-4f10-aea3-32872b586ac0%2Fpqf1pln_processed.jpeg&w=3840&q=75)
Transcribed Image Text:0 - 30
31-60
61-90
91 - 120
Over120
Year
A/R Balance
Dec. 31
P1,968,750
Days
Days
Days
Days
Days
2004
0.3%
1.8%
12%
38%
65%
2003
1,500,000
0.5%
1.6%
11%
41%
70%
2002
697,500
0.2%
1.5%
9%
50%
69%
2001
1,224,000
0.4%
1.7%
10.2%
47%
81%
2000
1,865,500
0.9%
2.0%
9.7%
33%
95%
The balance of the allowance for doubtful accounts at December 31, 2005 (before
adjustment) is P126,750.
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