Problem 7-4A Requirement 1 and 2 only: Jarden Company has credit sales of $3.6 m

ID: 2473035 • Letter: P

Question

Problem 7-4A Requirement 1 and 2 only: Jarden Company has credit sales of $3.6 million for year 2013. On December 31, 2013, the company's Allowance for Doubtful Accounts has an unadjusted credit balance of $14,500. Jarden prepares a schedule of its December 31, 2013, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here.

Chapter 7 Accounting for Receivables 28 a schedule of it estimates the percent of Problem 7-4A Aging accounts receivable and Allowance for Doubtful Accounts has an unadjusted credit balance of $14.500. Jarden accounting for bad debts 92 its December 31.2013, accounts receivable by age. On the basis of past experience, it estimates the receivables in each age category that will become uncollectible. This information is sur Jarden Company has credit sales of $3.6 million for year 2013. On December 31. 2013, the com mmarized here. bita Expected Percent Age of December 31, 2013 Accounts Recelvable $830,000 254,000 B5.000 38,000 12,000 Accounts Receivable Not yet due 1 to 30 days past due 31 to 60 days past due 61 to 90 days past due Over 90 days past due Uncollectible 1.25% 2.00 6.50 32.75 68.00 f-l Required 1. Estimate the required balance of the Allowance for Doubtful Accounts at December 31, 2013, uig the aging of accounts receivable method. at December 31, 2013. Analysis Component 3. On June 30, 2014,Jarden Company concludes that a customer's $4,750 receivable (create uncollectible and that the account should be written off. What effect will this action have 2014 net income? Explain. ble (created in 2013 tion have on Problem 7.5A Analyting and journaliting notes2012 The following selected transactions are from Qh transactions are frorm Ohlm

Explanation / Answer

Solution :

accounts receivable

age

uncollectible %

uncollectible

a*c

830,000

not yer due

1.25%

10,375

254,000

1-30 days past due

2.00%

5,080

86,000

31-60 days past due

6.50%

5,590

38,000

61-90 days past due

32.75%

12,445

12,000

over 90 days past due

68.00%

8,160

allowance balance as at dec 31, 2013

41,650.00

allowance for uncollectible balance as at Dec 31,2013

41650

Less : Begining balance

-14500

Bad debts expense

27150

Adjusting entry for bad debt expense

account title

Debit

Credit

Bad debts expense

27150

allowance for uncollectible