acct 220 408196
ESTIMATION AND RECORDING OF UNCOLLECTIBLE ACCOUNTS ‘
AGING OF ACCOUNTS RECEIVABLE METHOD
Part 1 ‘ In 2009, Vandolay reported $300,000 in sales. The company’s allowance for doubtful accounts has an unadjusted credit balance of $12,000. Vandolay Industries accountants prepared the following Aging of Accounts Receivable:
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|
Customer |
Total |
Number of days unpaid |
|||
|
0 30 |
30 60 |
60 90 |
Over 90 |
||
|
Alpha Sales |
$ 700 |
$ 700 |
|||
|
Gamma Manufacturing Co. |
1,900 |
$ 1,900 |
|||
|
Delta Shipping Corp. |
2,200 |
$2,200 |
|||
|
Epsilon Industries |
6,000 |
$6,000 |
|||
|
Theta Manufacturing |
1,800 |
1,800 |
|||
|
Zeta Industries |
600 |
600 |
|||
|
Other customers |
136,800 |
88,100 |
26,900 |
9,800 |
12,000 |
|
Totals |
$150,000 |
$90,000 |
$30,000 |
$12,000 |
$18,000 |
Vandolay accountants believe that receivables 0 30 days old have a 2% chance of noncollection. Receivables 30 60 days old have a 4% chance of noncollection. Receivables 60 90 days old have an 8% chance of noncollection. Receivables over 90 days old have a 20% chance of noncollection. The company’s allowance for doubtful accounts has an unadjusted credit balance of $12,000. Prepare the required adjusting journal entry.
|
Bad Debt Expense |
Allowance for Doubtful Accounts |
HW 8 ‘ 2, CONTINUED
Part 2 ‘ Assume instead that the company’s allowance for doubtful accounts has an unadjusted debit balance of $400. Prepare the required adjusting journal entry.
|
Bad Debt Expense |
Allowance for Doubtful Accounts |
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