Ache Company has organized its accounts receivable by customer and how long each
ID: 2593069 • Letter: A
Question
Ache Company has organized its accounts receivable by customer and how long each receivable has been outstanding. Ache records bad debt expense of an analysis of an aged schedule. The flowing information is as of the end of the years (December 31) Days Past Due 31-60 d Over 60 days Customer # 10901 10902 10903 10904 10905 10906 Total Total Due Current 1-30 days 70,000 60,000 10,000 50,000 150,000 60,000 170,000 30,000 50,000 110,000 10,000 20,000 20,000 20,000 20,000 $ 10,000 10,000 $ 20,000 $ 20,000 $ 20,000 490,000 $350,000$100,000 2% 5% 30% 95% % uncollectable At the beginning of the year, Ache has accounts receivable of $500,000 and a credit balance of $30,000 in its allowance for uncollectable accounts. During the year, it wrote off specific accounts receivable in the amount of $80,000. Assume no recoveries of write-offs during the year. Required a. Compute the bad debt expense for the year ending December 31 b. Compute the net realizable value of Ache's accounts receivable at December 31, c. Prepare the journal entry to record the bad debt expense for the year.Explanation / Answer
Answer a. Total Due Days Past Due Current 1 -30 Days 31-60 Days Over 60 Days Accounts Receivable 490,000 350,000 100,000 20,000 20,000 % Uncollectible 2% 5% 30% 95% Amt. Uncollectible 37,000 7,000 5,000 6,000 19,000 Bad Debt Expenses = $87,000 Allowance for Uncollectible Accounts Beg. Bal. 30,000 Amt W/o 80,000 87,000 Bad Debt End. Bal. 37,000 Answer b. Accounts Receivable 490,000 Less: Allowance for Uncollectible Accounts (37,000) Net Relizable Value - Accounts Receivable 453,000 Answer c. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Dec Bad Debt Expenses Dr. 87,000 To Allowance for Uncollectible Accounts 87,000 (Record the Bad Debt Expenses)