Oriole Company has accounts receivable of $108,600 at March 31, 2022. Credit terms are 2/10, n/30. At March 31, 2022, there is a $1,500 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimates of bad debts are as shown below. Age of Accounts Balance, March 31 Estimated Percentage Uncollectible 2022 2021 Current $71,900 $75,000 3% 1–30 days past due 19,700 8,000 7% 31–90 days past due 9,400 2,400 23% Over 90 days past due 7,600 1,100 51% $108,600 $86,500 1. Determine the total estimated uncollectibles at March 31, 2022. 2. Prepare the adjusting entry at March 31, 2022, to record bad debt expense.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Oriole Company has
|
Age of Accounts |
Balance,
March 31 |
Estimated Percentage
Uncollectible |
||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
|
Current
|
$71,900 | $75,000 | 3% | |||
|
1–30 days past due
|
19,700 | 8,000 | 7% | |||
|
31–90 days past due
|
9,400 | 2,400 | 23% | |||
|
Over 90 days past due
|
7,600 | 1,100 | 51% | |||
| $108,600 | $86,500 |
1. Determine the total estimated uncollectibles at March 31, 2022.
2. Prepare the
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