Rainy Day Company, a wholesaler, uses the aging method to estimate bad debt losses. The following schedule

Question:

Rainy Day Company, a wholesaler, uses the aging method to estimate bad debt losses. The following schedule of aged accounts receivable was prepared at December 31, 2013.

Age of Accounts........................................................................... Amount

0-30 days . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $478,600

31-60 days . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,300

61-90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,200

91-120 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,300

Over 120 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,300

$759,700

The following schedule shows the year-end receivables balances and uncollectible accounts experience for the previous five years.

Rainy Day Company, a wholesaler, uses the aging method to

The unadjusted Allowance for Bad Debts balance on December 31, 2013, is $25,124.
Instructions:
Compute the correct balance for the allowance account based on the average loss experience for the last five years and prepare the appropriate end-of-year adjusting entry.

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...
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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0538479738

18th edition

Authors: Earl K. Stice, James D. Stice

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