Answer:
1. Use your spreadsheet to recalculate the needed adjustment and account balances.
These are the new balances fo the accounts.
Acc Rec Allow
5% $ 65,000 $ 3,250 Not yet due
10% $ 34,000 $ 3,400 1-30 days
20% $ 16,000 $ 3,200 31-60 days
40% $ 10,000 $ 4,000 61-90 days
80% $ 14,400 $ 11,520 Over 90 days
$ 139,400 $ 25,370
It's necessary to record an entry adjustment to the Allowance for Uncollectible Accounts to exhibit the correct balance.
Bad debt expense $ 23,870
Allowance for Uncollectible Accounts $ 23,870
Final Balance
Accounts Receivable $ 139,400
Allowance for Uncollectible Accounts $ 25,370
Explanation:
At the begining the situation was :
Balance
$ 78,000 5% $ 3,900
$ 34,000 10% $ 3,400
$ 16,000 20% $ 3,200
$ 10,000 40% $ 4,000
$ 12,000 80% $ 9,600
$ 150,000 $ 24,100
But then were changes in the balance of the Accounts Receivables, so the new escenario was:
Acc. Rec Allow.
5% $ 65,000 $ 3,250 Not yet due
10% $ 34,000 $ 3,400 1-30 days
20% $ 16,000 $ 3,200 31-60 days
40% $ 10,000 $ 4,000 61-90 days
80% $ 14,400 $ 11,520 Over 90 days
$ 139,400 $ 25,370
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Bad debt expense $ 23,870
Allowance for Uncollectible Accounts $ 23,870
With this entry the Allowance for Uncollectible Accounts with a credit of $1,500 it's corrected to the new balance of $25,370 Debit.
