Question

During 2015, Bears Inc. recorded credit sales of $680,000. Before adjustments at year-end, Bears has accounts receivable of $300,000, of which $51,000 is past due, and the allowance account had a credit balance of $2,700. Using the aging of receivables approach, what would be the adjustment assuming Bears expects it will not to collect 10% of the amount not yet past due and 24% of the amount past due?Bad Debt Expense 39,840 Allowance for Uncollectible accounts 39,840Allowance for Uncollectible accounts 34,440 Bad Debt Expense 34,440Bad Debt Expense 34,440 Allowance for Uncollectible accounts 34,440Bad Debt Expense 37,14Allowance for Uncollectible accounts 37,140

Answer 1

Answer:

Bad Debts Expense                      Debit                  $ 34,440

Allowance for Uncollectible accounts   Credit                          $ 34,440

Explanation:

Computation of amount of uncollectible balances to be recorded

Total accounts Receivable                                    $ 300,000

Accounts past due                                                  $   51,000

Accounts not yet past due                                     $ 249,000

Estimated uncollectible from not yet past due         10 %

Estimated uncollectible from past due                       24 %

Estimated uncollectible from not yet past due 10 % * $ 249,000  = $ 24,900

Estimated uncollectible from past due 24 % * $ 51,000            =     $   12,240

Total Estimated Uncollectible amounts                                            = $ 37,140  

Available balance in Allowance account                                           $   (2,700)

Allowance for uncollectible accounts to be recorded                       $ 34,440