Vandolay reported $300,000 in sales. The company's allowance for doubtful accounts has an unadjusted credit balance of $12,000. Vandolay Industries accountants prepared the following Aging of Accounts Receivable:

Customer	Total	Number of days unpaid
0-30	30-60	60-90	Over 90
Alpha Sales	$ 700		$ 700
Gamma Manufacturing Co.	1,900	$ 1,900
Delta Shipping Corp.	2,200			$2,200
Epsilon Industries	6,000				$6,000
Theta Manufacturing	1,800		1,800
Zeta Industries	600		600
Other customers	136,800	88,100	26,900	9,800	12,000
Totals	$150,000	$90,000	$30,000	$12,000	$18,000

Vandolay accountants believe that receivables 0-30 days old have a 2% chance of noncollection. Receivables 30-60 days old have a 4% chance of noncollection. Receivables 60-90 days old have an 8% chance of noncollection. Receivables over 90 days old have a 20% chance of noncollection. The company's allowance for doubtful accounts has an unadjusted credit balance of $12,000. Prepare the required adjusting journal entry.

Bad Debt Expense

Allowance for Doubtful Accounts

HW 8 ' 2, CONTINUED

Part 2 ' Assume instead that the company's allowance for doubtful accounts has an unadjusted debit balance of $400. Prepare the required adjusting journal entry.

Bad Debt Expense

Allowance for Doubtful Accounts

Answer rating: 100% (QA)

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