Marc Pty Ltd has accounts receivable of $92 500 at 31 March 2016. An analysis of the accounts shows these amounts: 

Credit terms are 2/7, n/30. At 31 March 2016 there is a $1600 credit balance in Allowance for Doubtful Debts before adjustment. The entity uses the ageing of accounts receivable basis for estimating uncollectable accounts. Marc Pty Ltd’s estimates of bad debts are as follows: 

Required

(a) Determine the total estimated uncollectables.

(b) Prepare the adjusting entry at 31 March 2016 to record bad debts expense.

(c) Discuss the implications of the changes in the ageing schedule from 2015 to 2016.

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Month of sale March February December and January November and October Balance, 31 March 2015 $75.000 8000 2400 1100 $86500 2016 $65 000 12600 8500 6400 $92500