Problem
Menge Company has accounts receivable of $93,100 at March 31. An analysis of the accounts shows the following information.
Credit terms are 2/10, n/30. At 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 shown below.
|
Month of Sale
|
Balance, March 31
|
|
March
|
$60,000
|
|
February
|
17,600
|
|
January
|
8,500
|
|
Prior to January
|
7,000
|
|
$93,100
|
|
Age of Accounts
|
Estimated Percentage Uncollectible
|
|
1-30 days
|
2.0%
|
|
31-60 days
|
5.0%
|
|
61-90 days
|
20.00%
|
|
Over 90 days
|
50.00%
|
A. Determine the total estimated uncollectibles.
B. Prepare the adjusting entry at March 31 to record bad debt expense.