Banks Corporation estimates its annual provision for uncollectible accounts by analyzing the aged schedule of accounts receivable.

It is common industry practice to estimate an allowance for uncollectible accounts based on the following rules:

Aging Category                     Allowance Provided

Current ……………………………              2%

1– 30 Days Past Due………………        7%

31– 60Days Past Due………………     20%

61– 90 Days Past Due………………    40%

Over90Days Past Due……………… 100%

Prepare the journal entry to record the provision for bad debts assuming that the existing credit balance in the allowance for doubtful accounts is equal to $ 23,108.

Transcribed Image Text:

Banks Corporation: Aged Schedule of Accounts Recelvable Past Due Curet 1-30 Days 31-60 Days 61-90 Days Over 90 Days Total Totals $237000 $127400 110,000 $56,000 $19600 $550,000