Credit Losses Based on Accounts Receivable At December 31, Rinehart Company had a balance of $311,800 in its Accounts Receivable account and a credit balance of $2,800 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $317,600 in debit balances and $5,800 in credit balances. The company aged its accounts as follows: Current $264,000 0-60 days past due 30,000 61-180 days past due 13,200 Over 180 days past due 10,400 $317,600 In the past, the company has experienced credit losses as follows: 2% of current balances, 6% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 30% of balances over six months past due. The company bases its allowance for doubtful accounts on an ageing analysis of accounts receivable.
Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.
Credit Losses Based on Accounts Receivable At December 31, Rinehart Company had a balance of $311,800 in its Accounts Receivable account and a credit balance of $2,800 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $317,600 in debit balances and $5,800 in credit balances. The company aged its accounts as follows: Current $264,000 0-60 days past due 30,000 61-180 days past due 13,200 Over 180 days past due 10,400 $317,600 In the past, the company has experienced credit losses as follows: 2% of current balances, 6% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 30% of balances over six months past due. The company bases its allowance for doubtful accounts on an ageing analysis of accounts receivable.
Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.
Related questions
Jarden Company has credit sales of $2,800,000 for year 2017. On December 31, 2017, the companyâs Allowance for Doubtful Accounts has an unadjusted credit balance of $16,232. Jarden prepares a schedule of its December 31, 2017, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here.
| DECEMBER 31, 2017 Accounts Receivable | âAge of Accounts Receivable | âExpected Percent Uncollectible |
| $560,000 | Not yet due | 0.85% |
| 224,000 | 1 to 30 days past due | 1.60 |
| 44,800 | 31 to 60 days past due | 6.10 |
| 22,400 | 61 to 90 days past due | 30.75 |
| 4,480 | Over 90 days past due | 64.00 |
1. Estimate the required balance of the Allowance for Doubtful Accounts at December 31, 2017, using the aging of accounts receivable method.
| âACCOUNTS RECEIVABLE | âPERCENT UNCOLLECTIBLE (#.##%) | âESTIMATED UNCOLLECTIBLE | ||||
| âNot due: | X | ââ= | ||||
| â1 to 30: | âX | = | ||||
| 31 to 60: | âX | = | ||||
| â61 to 90: | âX | = | ||||
| âOver 90: | X | = |
âESTIMATED BALANCE OF ALLOWANCE FOR UNCOLLECTIBLES: __________ CREDIT OR DEBIT? _________
2. Prepare the adjusting entry to record bad debts expense at December 31, 2017.
Record the estimated bad debts.
| âDATE | âGENERAL JOURNAL | âDEBIT | âCREDIT |
| âDec 31 | |||
