A company has the following unadjusted account balance at December 31 of the current year: Allowance for Doubtful Accounts of $3,400 (debit balance). This company uses the aging of accounts receivable to estimate its bad debts. The following aging schedule reflects its accounts receivable at the current year end: Account Age Balance Estimated uncollected Percentage Current (not yet due) $396,400 2.0% 1-30 days past due 277,800 4.0 31-60 days past due 48,000 8.5 61-90 days past due 6,600 39.0 Over 90 days past due 2,800 82.0 Total $731,600 Calculate the amount of Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet. Show your work here. Prepare the adjusting journal entry to record the bad debts expense for the current year into the general journa
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
A company has the following unadjusted account balance at December 31 of the current year: Allowance for Doubtful Accounts of $3,400 (debit balance). This company uses the aging of
| Account Age | Balance | Estimated uncollected Percentage |
| Current (not yet due) | $396,400 | 2.0% |
| 1-30 days past due | 277,800 | 4.0 |
| 31-60 days past due | 48,000 | 8.5 |
| 61-90 days past due | 6,600 | 39.0 |
| Over 90 days past due | 2,800 | 82.0 |
| Total | $731,600 |
- Calculate the amount of Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet. Show your work here.
- Prepare the
adjusting journal entry to record the bad debts expense for the current year into the general journal.
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