Leland Hotels has accounts receivable of $98,100 at March 31. An analysis of the accounts shows the following:
|
Month of Sale
|
Balance, March 31
|
|
March
|
$65,000
|
|
February
|
17,600
|
|
January
|
8,500
|
|
Prior to January
|
7,000
|
|
|
$98,100
|
Credit terms are 2/10, n/30. On March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 prior to adjustment. The company uses the percentage of receivables basis for estimating uncollectible accounts. The company's estimate of bad debts is as follows:
|
Age of Accounts
|
Estimated Percentage Uncollectible
|
|
1-30 days
|
2.0%
|
|
30-60 days
|
5.0%
|
|
60-90 days
|
30.0%
|
|
Over 90 days
|
50.0%
|
Instructions
(a) Determine the total estimated uncollectible.
(b) Prepare the adjusting entry at March 31 to record bad debts expense.