Answered: Marx Corporation has accounts…

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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Question

Marx Corporation has accounts receivable of $96,000 at March 31, 2018. An analysis of the accounts shows these amounts.

	Balance, March 31
Month of Sale	2018	2017
March (current)	$65,500	$76,100
February (1 – 30 days past due)	13,100	7,200
December and January (31 – 90 days past due)	9,500	2,500
(over 90 days past due)	7,900	1,200
	$96,000	$87,000

Credit terms are 2/10, n/30. At March 31, 2018, there is an unadjusted $2,400 credit balance in Allowance for Doubtful Accounts. The company uses the percentage of receivables by age category for estimating uncollectible accounts Marx’s estimates of bad debts are as shown below.

Age of Accounts		Estimated Percentage Uncollectible
Current		2%
1–30 days past due		6%
31–90 days past due		30%
Over 90 days past due		50%

Prepare the adjusting entry at March 31, 2018, to record bad debts expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Mar. 31

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