Ingles Company has accountsreceivable of $93,100 at March 31. An analysis of the
ID: 2433960 • Letter: I
Question
Ingles Company has accountsreceivable of $93,100 at March 31. An analysis of the accountsshows the information:
Month of Sale Balance,March 31
March$60,000
February 17,600
January 8,500
Prior to January 7,000
93,100
Credit terms are 2/10, n/30. At March 31, Allowance for DoubtfulAccounts has a credit balance of $1,200 prior to adjustments. Thecompany uses the percentage-of-receivables basis for estimatinguncollectible accounts. The company’s estimate of bad debtsis as follows.
Estimated Percentage
AgeofAccounts Uncollectible
1 – 30 days 2.0 %
31 – 60days 5.0%
61 – 90 days 30.0 %
Over 90 days 50.0 %
Instructions
(a) Determine the total estimateduncollectibles.
(b) Prepare the adjusting entry atMarch 31 to record bad debts expense.
Explanation / Answer
Age of Accounts 1-30 31-60 61-90 >90 Uncollectible Percentage 2% 5% 30% 50% Receivables 60,000 17,600 8,500 7,000 Estimated Uncollectible 1,200 880 2,550 3,500 Total Estimated Uncollectible 8,130 Mar 31 Allowance for DoubtfulAccounts 9,330 AccountsReceivables 9,330