Buffet Company had a $300 debit balance in Allowance for Doubtful Accounts at December 31, 2017, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible Current Accounts $170,000 1% 1-30 days past due 15,000 3% 31-60 days past due 12,000 6% 61-90 days past due 5,000 15% Over 90 days past due 9,000 30% Total Accounts Receivable $211,000 Requirement: 1. Calculate the uncollectible amount. Show your work. 2. Prepare the adjusting entry on December 31, 2017, to recognize bad debts expense.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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1. Calculate in collectible amount

2. prepare adjusting entry bad debt expense 

**Aging of Accounts Receivable and Provision for Uncollectible Accounts**

Buffet Company had a $300 debit balance in the Allowance for Doubtful Accounts as of December 31, 2017, before accounting for the current year's provision for uncollectible accounts. An analysis of accounts receivable as of that date revealed the following:

| **Category**                       | **Amount ($)** | **Estimated Percentage Uncollectible** |
|------------------------------------|----------------|----------------------------------------|
| Current Accounts                   | 170,000        | 1%                                      |
| 1–30 days past due                 | 15,000         | 3%                                     |
| 31–60 days past due                | 12,000         | 6%                                     |
| 61–90 days past due                | 5,000          | 15%                                    |
| Over 90 days past due              | 9,000          | 30%                                    |
| **Total Accounts Receivable**      | 211,000        |                                        |

**Requirements:**

1. **Calculate the Uncollectible Amount:** 
   - Apply the estimated percentage uncollectible to each category.
   
     - Current Accounts: $170,000 * 1% = $1,700
     - 1–30 days past due: $15,000 * 3% = $450
     - 31–60 days past due: $12,000 * 6% = $720
     - 61–90 days past due: $5,000 * 15% = $750
     - Over 90 days past due: $9,000 * 30% = $2,700

   - Total uncollectible amount = $1,700 + $450 + $720 + $750 + $2,700 = $6,320

2. **Prepare the Adjusting Entry on December 31, 2017, to Recognize Bad Debts Expense:**

   - First, determine the required ending balance in the Allowance for Doubtful Accounts, which corresponds to the total uncollectible amount calculated above: $6,320.
   - Given that the current balance in the Allowance for Doubtful Accounts is a $300 debit, we need to adjust this to get to the $6,320 credit balance required.

**Adjusting Entry Calculation:**
   - Required credit balance: $6,
Transcribed Image Text:**Aging of Accounts Receivable and Provision for Uncollectible Accounts** Buffet Company had a $300 debit balance in the Allowance for Doubtful Accounts as of December 31, 2017, before accounting for the current year's provision for uncollectible accounts. An analysis of accounts receivable as of that date revealed the following: | **Category** | **Amount ($)** | **Estimated Percentage Uncollectible** | |------------------------------------|----------------|----------------------------------------| | Current Accounts | 170,000 | 1% | | 1–30 days past due | 15,000 | 3% | | 31–60 days past due | 12,000 | 6% | | 61–90 days past due | 5,000 | 15% | | Over 90 days past due | 9,000 | 30% | | **Total Accounts Receivable** | 211,000 | | **Requirements:** 1. **Calculate the Uncollectible Amount:** - Apply the estimated percentage uncollectible to each category. - Current Accounts: $170,000 * 1% = $1,700 - 1–30 days past due: $15,000 * 3% = $450 - 31–60 days past due: $12,000 * 6% = $720 - 61–90 days past due: $5,000 * 15% = $750 - Over 90 days past due: $9,000 * 30% = $2,700 - Total uncollectible amount = $1,700 + $450 + $720 + $750 + $2,700 = $6,320 2. **Prepare the Adjusting Entry on December 31, 2017, to Recognize Bad Debts Expense:** - First, determine the required ending balance in the Allowance for Doubtful Accounts, which corresponds to the total uncollectible amount calculated above: $6,320. - Given that the current balance in the Allowance for Doubtful Accounts is a $300 debit, we need to adjust this to get to the $6,320 credit balance required. **Adjusting Entry Calculation:** - Required credit balance: $6,
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