Chapter 9, Problem 3PSA

Problem 9-3A Aging accounts receivable and accounting for bad debts P2 P3

On December 31, Jarden Co.'s Allowance for Doubtful Accounts has an unadjusted credit balance of S 14,500. Jarden prepares a schedule of its December 31 accounts receivable by age.

	»	B	_E_
1	Accounts	Age of	Expected Percent
2	Receivable	Accounts Receivable	Uncollectible
3	J830,000	Not yet due	1.25%
	254,000	1 to 30 days past due	2.00
:	86,000	31 to 60 days past due	6.50
6	38,000	61 to 90 days past due	32.75
7	12,000	Over 90 days past due	68.00

Required

1. Compute the required balance of the Allowance for Doubtful Accounts at December 31 using an aging of accounts receivable.
2. Prepare the adjusting entry¹ to record bad debts expense at December 31. Check (2) Dr. Bad Debts Expense, $27,150
Analysis Component 3. On June 30 of the next year, Jarden concludes that a customer's $4,750 receivable is uncollectible and the account is written off. Does this write-off directly affect Jarden's net income?