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Financial & Managerial Accounting
Found in: Page 345
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.

c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $100 debit.

The amount of bad debt expense considering a debit balance of $100 in allowance for doubtful accounts will be $11,920.

See the step by step solution

Step by Step Solution

Adjusting journal entry

Date

Particulars

Debit

Credit

Dec 31

Bad debt expense

$11,920

Allowance for doubtful accounts

$11,920

(To record the bad debt expense)

Working notes

Particulars

0

1 to 30

31 to 60

61 to 90

Over 90

Accounts receivables

$396,000

$90,000

$36,000

$18,000

$30,000

Multiply: Percent uncollectible

1%

2%

5%

7%

10%

Allowance for doubtful accounts

$3,960

$1,800

$1,800

$1,260

$3,000

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