a. complete the table below to calculate the estimated balance of allowance for doubtful accounts using…
a. complete the table below to calculate the estimated balance of allowance for doubtful accounts using aging of accounts receivable.\nb. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $4,100 credit.\nc. prepare the adjusting entry to record bad debts expense using the estimate from part a. assume the unadjusted balance in the allowance for doubtful accounts is a $600 debit.\ncomplete this question by entering your answers in the tabs below.\nreq a\nreq b and c\ncomplete the table below to calculate the estimated balance of allowance for doubtful accounts using aging of accounts receivable.\n| | accounts receivable | × | percent uncollectible (%) | = | estimated uncollectible |\n| not due: | | x | | = | |\n| 1 to 30: | | x | | = | |\n| 31 to 60: | | x | | = | |\n| 61 to 90: | | x | | = | |\n| over 90: | | x | | = | |\n| estimated balance of allowance for uncollectibles | | | | | |
Answer
Explanation:
Step1: Calculate estimated uncollectible for each category
Multiply accounts - receivable amount by percent uncollectible for each time - period category. For example, if accounts receivable for "Not due" is $A$ and percent uncollectible is $p_1$, then estimated uncollectible for "Not due" is $A\times p_1$.
Step2: Sum up estimated uncollectible amounts
Sum the estimated uncollectible amounts from all categories to get the estimated balance of Allowance for Doubtful Accounts. Let $E_1,E_2,\cdots,E_5$ be the estimated uncollectible amounts for "Not due", "1 - 30", "31 - 60", "61 - 90", and "Over 90" respectively. The estimated balance of Allowance for Doubtful Accounts $E = E_1+E_2+E_3+E_4+E_5$.
Step3: For part b
The bad - debts expense is the difference between the estimated balance of Allowance for Doubtful Accounts (from part a) and the unadjusted credit balance. Let the estimated balance be $E$ and the unadjusted credit balance be $U_{credit}$. Bad - debts expense $=E - U_{credit}$. The adjusting entry is: Debit Bad Debts Expense and Credit Allowance for Doubtful Accounts.
Step4: For part c
The bad - debts expense is the sum of the estimated balance of Allowance for Doubtful Accounts (from part a) and the unadjusted debit balance. Let the estimated balance be $E$ and the unadjusted debit balance be $U_{debit}$. Bad - debts expense $=E+U_{debit}$. The adjusting entry is: Debit Bad Debts Expense and Credit Allowance for Doubtful Accounts.
Since the accounts - receivable amounts and percent uncollectible are not given in the problem, we cannot provide numerical answers. But the general steps for calculations and adjusting entries are as above.
Answer:
a. Fill in the table by multiplying Accounts Receivable by Percent Uncollectible for each row and then sum the results in the "Estimated Uncollectible" column to get the estimated balance of allowance for uncollectibles. b. Debit Bad Debts Expense, Credit Allowance for Doubtful Accounts. The amount of Bad Debts Expense = Estimated balance of Allowance for Doubtful Accounts (from part a) - Unadjusted credit balance of $4100$. c. Debit Bad Debts Expense, Credit Allowance for Doubtful Accounts. The amount of Bad Debts Expense = Estimated balance of Allowance for Doubtful Accounts (from part a)+ Unadjusted debit balance of $600$.