Parry Company has accounts receivable of $95,400 at March 31, 2012. An analysis of the accounts shows these amounts.
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| Month of Sale | 2012 | 2011 |
| March | $65,000 | $75,000 |
| February | 12,900 | 8,000 |
| December and January | 10,100 | 2,400 |
| November and October | 7,400 | 1,100 |
| $95,400 | $86,500 | |
Credit terms are 2/10, n/30. At March 31, 2012, there is a $2,100 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.
| Estimated Percentage | |
| Age of Accounts | Uncollectible |
| Current | 2% |
| 1–30 days past due | 5 |
| 31–90 days past due | 30 |
| Over 90 days past due | 50 |
Instructions
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31, 2012, to record bad debts expense.
(c) Discuss the implications of the changes in the aging schedule from 2011 to 2012.
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