Question

Menge Company has accounts receivable of $93,100 at March 31. An analysis of the accounts shows the following information.
Month of Sale Balance, March 31
March .......... $60,000
February ......... 17,600
January ........... 8,500
Prior to January ....... 7,000
$93,100
Credit terms are 2/10, n/30. At 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 shown below.
Estimated Percentage
Age of Accounts Uncollectible
1–30 days ....... 2.0%
31–60 days ...... 5.0%
61–90 days ...... 20.0%
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.



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  • CreatedJanuary 30, 2014
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