Chapter 9, Problem 9.6E

Bad Debt Expense, Aging of Accounts Receivable, Journal Entry. Sammy’s Downtown Properties developed an aged schedule of accounts receivable at the end of each year.

			Past Due
Customer	Current	1-30 Days	31-60 Days	61-90 Days	Over 90 Days	Totals
Crosby Consultants	$120,000	$45,000	$3,000			$168,000
Whitemann Company	4,000		18,500		$ 68,000	90,500
Lite Laser Products		29.500	45,700	$13,900	196.900	286,000
Dual Power Industries				31,800	11,100	42,900
Totals	$124,000	$74,500	$67200	$45,700	$276,000	$587,400

The company estimated an allowance for uncollectible accounts based on the following estimates

Aging Category	Allowance Provided
Current	4%
1-30 days past due	8
31-60 days past due		10
61-90 days past due		35
Over days past due		50

Sammy’s reported net credit sales of $4,500_,000 for the current year. We present the company’s ending balances of accounts receivable and the allowance for uncollectible accounts

Required

1. a. Compute the balance required in the allowance for uncollectible accounts.
2. b. Prepare the journal entry to record the bad debt provision for the current year
3. c. Independent of your answer to part (b), prepare the journal entry to record the bad debt provision for the current year assuming that the allowance for uncollectible accounts had a $7,435 debit balance.
4. d. Using your solution to parts (a) and (b), indicate how Sammy’s will report its accounts receivable on the company’s year-end balance sheet.