Townes Supplies uses the Aging of Accounts Receivable method to account for uncollectible accounts. At the December 31,2021 year-end, Townes had an Accounts Receivable balance of $124,000 and an Allowance for Doubtful Accounts debit balance of $2,000, as well as the aging schedule below. Based on past history, Townes estimate uncollectible accounts to be 3% for current receivables (1-30 days), 10% for 31-60 days, 15% for 61-90 days, and 20% for over 90 days.

Required

a) Record Bad Debt Expense for Townes at December 31, 2021.

b) On January 5, 2022, after months of attempting collection, Townes decides to write of the full balance due from Beaumont.

Record the journal entry for this write-off. 

What is the Allowance for Doubtful Accounts balance after the write-off? 

Do you think the percentages (%'s) Townes uses to estimate uncollectible accounts is appropriate? Why or why not?r

Transcribed Image Text:

Customer Ardrossan Beaumont Fort Macleod Jasper Mundare Oyen Spruce Grove Wetaskiwin Total 1-30 days 31-60 days 61-90 days 5,200 1,600 32,000 750 3,900 500 2,500 42,000 9,500 16,000 3,950 104,700 10,200 3,000 Over 90 days 6,000 100 6,100 Total Balance 6,800 7,000 32,750 4,400 2,600 42,000 9,500 19,950 124,000 Customer Ardrossan Beaumont Fort Macleod Jasper Mundare Oyen Spruce Grove Wetaskiwin Total 1-30 days 31-60 days 61-90 days 5,200 1,600 32,000 750 3,900 500 2,500 42,000 9,500 16,000 3,950 104,700 10,200 3,000 Over 90 days 6,000 100 6,100 Total Balance 6,800 7,000 32,750 4,400 2,600 42,000 9,500 19,950 124,000

Answer rating: 100% (QA)

Solution a Bad Debt Expenses for Townes on 31 st December 2021 The allowance for doubtful is an estimated amount of bad debts that are likely to arise ... View the full answer