I need help with this question. Thank you E7.7 Marc Pty Ltd has accounts recelva
ID: 2510238 • Letter: I
Question
I need help with this question. Thank you
E7.7 Marc Pty Ltd has accounts recelvable of $92 500 at 31 March 2016. An analysis of the accounts shows these amounts BALANCE, 31 MARCH MONTH OF SALE March February December and January November and October 2016 65 o00 12 600 8 500 2015 $75 000 8 000 2 400 1 100 $86 500 $92 500 Credit terms are 2/7, n/30. At 31 March 2016 there is a $160o credit balance In Allowance for Doubtful Debts before adjustment. The entity uses the agelng of accounts recelvable basis for estimating uncollectable accounts. Marc Pty Ltd's estimates of bad debts are as follows: AGE OF ACCOUNTS Current 1-30 days past due 31-90 days past due Over 90 days ESTIMATED PERCENTAGE UNCOLLECTABLE 2.0% 0 30.0 50.0 Requlred a. Determine the total estimated uncollectables. b. Prepare the adjusting entry at 31 March 2016 to record bad debts expense C. DIscuss the Implications of the changes In the agelng schedule from 2015 to 2016Explanation / Answer
a.
The total estimate uncollectible
65000*0.02+12 600*0.05+8 500*0.3+6 400*0.5 = 7680
b.Bad debts expense (7680 – 1 600 = 6080) 6080
Allowance for uncollectable accounts 6080
c.From 2015 to 2016 the total selling amount has increased significantly, forexample on February the amount increased from $8000 to $12600 and $2400to $8500 on December and January then on the end of year November andOctober, it increased from $1100 to $6400. However, in the early of the year,the selling amount has decreased rapidly of $10000, that is $75000 reducedto $65000.