Question

required information the following information applies to the questions displayed below. daley company prepared the following aging of receivables analysis at december 31. accounts receivable total days past due 0 1 to 30 31 to 60 61 to 90 over 99 $ 600,000 $ 402,000 $ 96,000 $ 42,000 $ 24,000 $ 36,000 percent uncollectible 1% 2% 5% 7% 10% complete this question by entering your answers in the tabs below. req a req b and c b. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $12,600 credit. c. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $1,600 debit. show less a view transaction list journal entry worksheet record estimated bad debts assuming that allowance for doubtful accounts has a $12,600 credit balance. note: enter debits before credits. date general journal debit credit december 31 bad debts expense allowance for doubtful accounts

Explanation:

Step1: Calculate estimated uncollectible amount

For 0 - days past due: $402,000\times1\%= 4020$
For 1 - 30 days past due: $96,000\times2\% = 1920$
For 31 - 60 days past due: $42,000\times5\%=2100$
For 61 - 90 days past due: $24,000\times7\% = 1680$
For over 90 days past due: $36,000\times10\%=3600$
Total estimated uncollectible = $4020 + 1920+2100 + 1680+3600=13320$

Step2: Calculate bad - debts expense when allowance has credit balance

The unadjusted balance in Allowance for Doubtful Accounts is a $12,600$ credit.
Bad debts expense = Estimated uncollectible - Unadjusted credit balance
Bad debts expense = $13320 - 12600=720$
The adjusting entry is:
Debit: Bad debts expense $720$
Credit: Allowance for doubtful accounts $720$

Step3: Calculate bad - debts expense when allowance has debit balance

The unadjusted balance in Allowance for Doubtful Accounts is a $1,600$ debit.
Bad debts expense = Estimated uncollectible+Unadjusted debit balance
Bad debts expense = $13320+1600 = 14920$
The adjusting entry is:
Debit: Bad debts expense $14920$
Credit: Allowance for doubtful accounts $14920$

Answer:

b. Journal entry:

Date	General Journal	Debit	Credit
	Allowance for doubtful accounts		$720$

c. Journal entry:

Date	General Journal	Debit	Credit
	Allowance for doubtful accounts		$14920$