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At December 31, 2018, the Accounts Receivable balance of Questor Application Inc is $190,000. The Allowance for Bad Debts account has a $6,110 debit balance. Questor Application Inc prepares the following aging schedule for its accounts receivable: (Click the icon to view the aging schedule.) Read the requirements. Requirement 1. Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018. Begin by determining the target balance of Allowance for Bad Debts by using the age of each account. Age of Accounts Accounts Receivable Estimated percent uncollectible Estimated total uncollectible 31-60 Days 90,000 $ 65,000 0.9% 1-30 Days 2.0% 61-90 Days $ 30,000 $ 8.0% Over 90 Days 5,000 54.0% Total Balance

At December 31, 2018, the Accounts Receivable balance of Questor Application Inc is $190,000. The Allowance for Bad Debts account has a $6,110 debit balance. Questor Application Inc prepares the following aging schedule for its accounts receivable: (Click the icon to view the aging schedule.) Read the requirements. Requirement 1. Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018. Begin by determining the target balance of Allowance for Bad Debts by using the age of each account. Age of Accounts Accounts Receivable Estimated percent uncollectible Estimated total uncollectible 31-60 Days 90,000 $ 65,000 0.9% 1-30 Days 2.0% 61-90 Days $ 30,000 $ 8.0% Over 90 Days 5,000 54.0% Total Balance

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Accounts Receivable and Bad Debt Adjustment - Questor Application Inc #### Scenario Overview: As of December 31, 2018, Questor Application Inc reported the following financial details: - **Accounts Receivable Balance:** $190,000 - **Allowance for Bad Debts Account:** $6,110 debit balance #### Aging Schedule for Accounts Receivable: Questor Application Inc utilizes an aging schedule to estimate the uncollectible portions of its accounts receivable. #### Requirements: **Requirement 1:** - Journalize the year-end adjusting entry for bad debts based on the aging schedule. - Show the T-account for the Allowance for Bad Debts at December 31, 2018. #### Steps to Determine Allowance for Bad Debts: 1. **Analyze the Aging Schedule:** - **Age of Accounts (Listed in Days)**: - 1-30 Days - 31-60 Days - 61-90 Days - Over 90 Days 2. **Accounts Receivable per Age Category:** - **1-30 Days:** $90,000 - **31-60 Days:** $65,000 - **61-90 Days:** $30,000 - **Over 90 Days:** $5,000 3. **Estimation Percent Uncollectible per Age Category:** - **1-30 Days:** 0.9% - **31-60 Days:** 2.0% - **61-90 Days:** 8.0% - **Over 90 Days:** 54.0% 4. **Estimated Total Uncollectible:** - Compute the uncollectible estimate amount for each age group category. Below is a summary table showing the estimation: | Age of Accounts (Days) | Balance ($) | Estimated Percent Uncollectible (%) | Estimated Total Uncollectible ($) | |------------------------|-------------|-------------------------------------|-----------------------------------| | 1-30 | 90,000 | 0.9 | ________ | | 31-60 | 65,000 | 2.0 | ________ | | 61-90 | 30,000 | 8.0 | ________ | | Over 90 | 5,000 | 54.0 | ________ | |
Transcribed Image Text:### Accounts Receivable and Bad Debt Adjustment - Questor Application Inc #### Scenario Overview: As of December 31, 2018, Questor Application Inc reported the following financial details: - **Accounts Receivable Balance:** $190,000 - **Allowance for Bad Debts Account:** $6,110 debit balance #### Aging Schedule for Accounts Receivable: Questor Application Inc utilizes an aging schedule to estimate the uncollectible portions of its accounts receivable. #### Requirements: **Requirement 1:** - Journalize the year-end adjusting entry for bad debts based on the aging schedule. - Show the T-account for the Allowance for Bad Debts at December 31, 2018. #### Steps to Determine Allowance for Bad Debts: 1. **Analyze the Aging Schedule:** - **Age of Accounts (Listed in Days)**: - 1-30 Days - 31-60 Days - 61-90 Days - Over 90 Days 2. **Accounts Receivable per Age Category:** - **1-30 Days:** $90,000 - **31-60 Days:** $65,000 - **61-90 Days:** $30,000 - **Over 90 Days:** $5,000 3. **Estimation Percent Uncollectible per Age Category:** - **1-30 Days:** 0.9% - **31-60 Days:** 2.0% - **61-90 Days:** 8.0% - **Over 90 Days:** 54.0% 4. **Estimated Total Uncollectible:** - Compute the uncollectible estimate amount for each age group category. Below is a summary table showing the estimation: | Age of Accounts (Days) | Balance ($) | Estimated Percent Uncollectible (%) | Estimated Total Uncollectible ($) | |------------------------|-------------|-------------------------------------|-----------------------------------| | 1-30 | 90,000 | 0.9 | ________ | | 31-60 | 65,000 | 2.0 | ________ | | 61-90 | 30,000 | 8.0 | ________ | | Over 90 | 5,000 | 54.0 | ________ | |
### Requirements 1. Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018. 2. Show how Questor Application Inc will report its net accounts receivable on its December 31, 2018, balance sheet.
Transcribed Image Text:### Requirements 1. Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018. 2. Show how Questor Application Inc will report its net accounts receivable on its December 31, 2018, balance sheet.
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