Ingles Company has accounts receivable of $93,100 at March 31. An analysis of th
ID: 2435512 • Letter: I
Question
Ingles Company has accounts receivable of $93,100 at March 31. An analysis of the accounts shows the following.
Month of Sale Balance, March 31
March $60,000
February 17,600
January 8,500
Prior to January 7,000
Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is as follows.
Age of Accounts
Estimated Percentage
Uncollectible
1-30 days 2.0%
31-60 days 5.0%
61-90 days 30.0%
Over 90 days 50.0%
Determine the total estimated uncollectibles.
$ ?
Prepare the adjusting entry at March 31 to record bad debts expense.
Date Account/Description Debit Credit
Mar. 31 Bad debts expense ?
Allowance for doubtful accounts ?
Explanation / Answer
Determine the total estimated uncollectibles. Age of Accounts Estimated Percentage Dues Uncollectible 1-30 days 2.0% 60,000 1200 31-60 days 5.0% 17,600 880 61-90 days 30.0% 8,550 2,550 Over 90 days 50.0% 7,000 3,500 TOTAL $8,130 Prepare the adjusting entry at March 31 to record bad debts expense. Date Account/Description Debit Credit Mar. 31 Bad debts expense $6,930 Allowance for doubtful accounts $6,930