Problem
ABC Company has prepared the following aging schedule for the company at December 31, 2021. The company uses the percentage of receivables approach to estimate bad debts.
|
|
|
Number of Days Outstanding
|
|
|
Total
|
0-30
|
31-60
|
61-90
|
91-120
|
Over 120
|
|
Accounts receivable
|
$375,000
|
$220,000
|
$90,000
|
$40,000
|
$10,000
|
$15,000
|
|
%uncollectible
|
|
1%
|
4%
|
8%
|
16%
|
30%
|
Prepare journal entries in good format assuming:
a) The company has a $1,000 debit balance in the allowance for doubtful accounts account before any adjustment for the current year's bad debt expense.
b) The company has a $2,500 credit balance in the allowance for doubtful accounts account at the beginning of the period.