2. 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 Estimated Uncollectible 0.5% Accounts Account Age Receivable $ 620,000 Not due yet 270,000 1-30 days overdue 145,000 31-60 days overdue 55,000 61-90 days overdue 32,000 91-120 days overdue 18.000 Over 120 days overdue S1,140,000 Total 20 80 20.0 50.0 70 0 Required: a. Calculate the amount of the Allowance for Doubtful Accounts that should be reported on the current year-end balance sheet. b. 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 $44.000 and that accounts receivable written off during the current year totaled $49.200. c. Prepare the adjusting journal entry to record bad debts expense on December 31 of the current year. d. Show how Accounts Receivable will appear on the current year-end balance sheet as of December 31.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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2. 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-
Estimated
Uncollectible
0.5%
2.0
80
20.0
50.0
Accounts
Account Age
Receivable
$ 620,000 Not due yet
270,000 1-30 days overdue
145,000 31-60 days overdue.
55,000 61-90 days overdue.
32,000 91-120 days overdue.
18.000 Over 120 days overdue
S1,140,000 Total
70.0
Required:
a. Calculate the amount of the Allowance for Doubtful Accounts that should be reported on the current year-end
balance sheet.
b. 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 $44.000 and that accounts receivable written off during the current year totaled $49,200.
c. Prepare the adjusting journal entry to record bad debts expense on December 31 of the current year.
d. Show how Accounts Receivable will appear on the current year-end balance sheet as of December 31.
Transcribed Image Text:2. 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- Estimated Uncollectible 0.5% 2.0 80 20.0 50.0 Accounts Account Age Receivable $ 620,000 Not due yet 270,000 1-30 days overdue 145,000 31-60 days overdue. 55,000 61-90 days overdue. 32,000 91-120 days overdue. 18.000 Over 120 days overdue S1,140,000 Total 70.0 Required: a. Calculate the amount of the Allowance for Doubtful Accounts that should be reported on the current year-end balance sheet. b. 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 $44.000 and that accounts receivable written off during the current year totaled $49,200. c. Prepare the adjusting journal entry to record bad debts expense on December 31 of the current year. d. Show how Accounts Receivable will appear on the current year-end balance sheet as of December 31.
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