Leland Company has accounts receivable of $98,100 at March 31. An analysis of the accounts shows the following information.
Month of Sale Balance, March 31
March ........... $65,000
February .......... 17,600
January ............ 8,500
Prior to January ........ 7,000
$98,100
Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $900 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company’s estimate of bad debts is shown below.
Estimated Percentage
Age of Accounts Uncollectible
1–30 days ............ 2.0%
31–60 days ........... 5.0%
61–90 days ........... 30.0%
Over 90 days .......... 50.0%
Instructions
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31 to record bad debt expense.