Asked by Sierra Snavely on May 26, 2024
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(a) The aging of Torme Designs' accounts receivable is shown below. Calculate the amount of each periodicity range that is deemed to be uncollectible.?? Estimated Uncollectible Accounts Age Interval Balance Percentage Amount Not past due $850,0003.50%1−30 days past due 47,5005.0031−60 days past due 21,75010.0061−90 days past due 11,25020.0091−180 days past due 5,06530.00181−365 days past due 2,50050.00 Over 365 days past due 1,145‾95.00 Total $939,210‾~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~{ \text { Estimated Uncollectible Accounts } } \\\begin{array} { | l | r | c | c | } \hline \text { Age Interval } & \text { Balance } & \text { Percentage } & \text { Amount } \\\hline \text { Not past due } & \$ 850,000 & 3.50 \% & \\\hline 1 - 30 \text { days past due } & 47,500 & 5.00 & \\\hline 31 - 60 \text { days past due } & 21,750 & 10.00 & \\\hline 61 - 90 \text { days past due } & 11,250 & 20.00 & \\\hline 91 - 180 \text { days past due } & 5,065 & 30.00 & \\\hline 181 - 365 \text { days past due } & 2,500 & 50.00 & \\\hline \text { Over } 365 \text { days past due } & \underline{1,145} & 95.00 & \\\hline \text { Total } & \underline{\mathbf { \$939,210 }} & & \\\hline\end{array} Estimated Uncollectible Accounts Age Interval Not past due 1−30 days past due 31−60 days past due 61−90 days past due 91−180 days past due 181−365 days past due Over 365 days past due Total Balance $850,00047,50021,75011,2505,0652,5001,145$939,210 Percentage 3.50%5.0010.0020.0030.0050.0095.00 Amount (b) If Allowance for Doubtful Accounts has a credit balance of $1,135.00, record the adjusting entry forthe bad debt expense for the year.
Adjusting Entry
An accounting journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period.
Bad Debt Expense
The cost associated with accounts receivable that a company does not expect to collect due to customer default.
Allowance For Doubtful Accounts
The contra asset account for accounts receivable.
- Utilize the aging of receivables approach to approximate the valuation of accounts that are likely uncollectable.
Verified Answer
MF
milan franciscoMay 30, 2024
Final Answer :
(a) Estimated Uncollectible Accounts \text { (a) } \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad { \text { Estimated Uncollectible } } \\\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad { \text { Accounts } } (a) Estimated Uncollectible Accounts
Age Interval Balance Percentage Amount Not past due $850,0003.50%$29,750.001−30 days past due 47,5005.002,375.0031−60 days past due 21,75010.002,175.0061−90 days past due 11,25020.002,250.0091−180 days past due 5,06530.001,519.50181−365 days past due 2,50050.001,250.00 Over 365 days past due 1,145‾95.001,087.75‾ Total: $939,210‾$40,407.25‾\begin{array} { | l | r | c | r | } \hline \text { Age Interval } & \text { Balance } & \text { Percentage } & \text { Amount } \\\hline \text { Not past due } & \$ 850,000 & 3.50 \% & \$ 29,750.00 \\\hline 1 - 30 \text { days past due } & 47,500 & 5.00 & 2,375.00 \\\hline 31 - 60 \text { days past due } & 21,750 & 10.00 & 2,175.00 \\\hline 61 - 90 \text { days past due } & 11,250 & 20.00 & 2,250.00 \\\hline 91 - 180 \text { days past due } & 5,065 & 30.00 & 1,519.50 \\\hline 181 - 365 \text { days past due } & 2,500 & 50.00 & 1,250.00 \\\hline \text { Over } 365 \text { days past due } & \underline{1,145} & 95.00 & \underline{1,087.75} \\\hline \text { Total: } & \underline{\mathbf { \$ 9 3 9 , 2 1 0 }} & & \underline{\mathbf { \$ 4 0 , 4 0 7 . 2 5 }} \\\hline\end{array} Age Interval Not past due 1−30 days past due 31−60 days past due 61−90 days past due 91−180 days past due 181−365 days past due Over 365 days past due Total: Balance $850,00047,50021,75011,2505,0652,5001,145$939,210 Percentage 3.50%5.0010.0020.0030.0050.0095.00 Amount $29,750.002,375.002,175.002,250.001,519.501,250.001,087.75$40,407.25
(b)Dec. 31 Bad Debt Expense ~~~~~~~~~~~~ 39.272.25
Allowance for Doubtful Accounts ~~~~~~~~~~~~ 39.272.25
Calculation of expense:
Amount of calculated uncollectible accounts $40,407.25
Less credit balance of account 1,135.00‾~~~~~~~~~~~~~~~~~~~\underline {1,135.00} 1,135.00
Bad debt expense $ 39.272 .25 ‾~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\underline { \textbf{\$ 39.272 .25 }} $ 39.272 .25
Age Interval Balance Percentage Amount Not past due $850,0003.50%$29,750.001−30 days past due 47,5005.002,375.0031−60 days past due 21,75010.002,175.0061−90 days past due 11,25020.002,250.0091−180 days past due 5,06530.001,519.50181−365 days past due 2,50050.001,250.00 Over 365 days past due 1,145‾95.001,087.75‾ Total: $939,210‾$40,407.25‾\begin{array} { | l | r | c | r | } \hline \text { Age Interval } & \text { Balance } & \text { Percentage } & \text { Amount } \\\hline \text { Not past due } & \$ 850,000 & 3.50 \% & \$ 29,750.00 \\\hline 1 - 30 \text { days past due } & 47,500 & 5.00 & 2,375.00 \\\hline 31 - 60 \text { days past due } & 21,750 & 10.00 & 2,175.00 \\\hline 61 - 90 \text { days past due } & 11,250 & 20.00 & 2,250.00 \\\hline 91 - 180 \text { days past due } & 5,065 & 30.00 & 1,519.50 \\\hline 181 - 365 \text { days past due } & 2,500 & 50.00 & 1,250.00 \\\hline \text { Over } 365 \text { days past due } & \underline{1,145} & 95.00 & \underline{1,087.75} \\\hline \text { Total: } & \underline{\mathbf { \$ 9 3 9 , 2 1 0 }} & & \underline{\mathbf { \$ 4 0 , 4 0 7 . 2 5 }} \\\hline\end{array} Age Interval Not past due 1−30 days past due 31−60 days past due 61−90 days past due 91−180 days past due 181−365 days past due Over 365 days past due Total: Balance $850,00047,50021,75011,2505,0652,5001,145$939,210 Percentage 3.50%5.0010.0020.0030.0050.0095.00 Amount $29,750.002,375.002,175.002,250.001,519.501,250.001,087.75$40,407.25
(b)Dec. 31 Bad Debt Expense ~~~~~~~~~~~~ 39.272.25
Allowance for Doubtful Accounts ~~~~~~~~~~~~ 39.272.25
Calculation of expense:
Amount of calculated uncollectible accounts $40,407.25
Less credit balance of account 1,135.00‾~~~~~~~~~~~~~~~~~~~\underline {1,135.00} 1,135.00
Bad debt expense $ 39.272 .25 ‾~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\underline { \textbf{\$ 39.272 .25 }} $ 39.272 .25
Learning Objectives
- Utilize the aging of receivables approach to approximate the valuation of accounts that are likely uncollectable.
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