On December 31, 2023, Toro Company’s Allowance for Doubtful Accounts had an unadjusted credit balance of $31,000. The accountant for Toro has prepared a schedule of the December 31, 2023, accounts receivable by age and, on the basis of past experience, has estimated the percentage of the receivables in each age category that will become uncollectible. This information is summarized as follows:

Required
1. Calculate the amount that should appear in the December 31, 2023, balance sheet as the Allowance for Doubtful Accounts.
2. Prepare the journal entry to record bad debt expense for 2023.

Analysis Component:
On June 30, 2024, Toro Company concluded that a customer’s $7,500 receivable (created in 2023) was uncollectible and that the account should be written off. What effect will this action have on Toro’s 2024 profit? Explain your answer.

Transcribed Image Text:

December 31, 2023 Accounts Receivable Age of Accounts Receivable Expected Percentage Uncollectible Not due (under 30 days) 1 to 30 days past due $1,500,000 708,000 152,000 98,000 24,000 31 to 60 days past due 61 to 90 days past due Over 90 days past due 1.25% 2.00 6.50 32.75 68.00