Leland Hotels has accounts receivable of $98,100 at March 31. An analysis of the accounts shows the

Question:

Leland Hotels has accounts receivable of $98,100 at March 31. An analysis of the accounts shows the following:

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. On March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 prior to adjustment. The company uses the percentage of receivables basis for estimating uncollectible accounts. The company’s estimate of bad debts is as follows:

Estimated Percentage

Age of Accounts Uncollectible

1–30 days ..........2.0%

30–60 days ........5.0%

60–90 days ..........30.0%

Over 90 days .......50.0%

(a) Determine the total estimated uncollectibles.

(b) Prepare the adjusting entry at March 31 to record bad debts expense.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...