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Exercise E8-4, Determine bad debts expense; prepare the adjusting entry for bad debts expense.
Financial and Managerial Accounting by Weygandt, Kieso, and Kimmel
Primer on Using Microsoft Excel in Accounting by Rex A Schildhouse
Exercise E8-4, Leland Company 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. At March 31, Allowance for Doubtful Accounts has a credit balance of $900 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 uncollectibles.
Accounts Receivable Amount % Estimated Uncollectible
Periodicity Amount Percentage Formula
Periodicity Amount Percentage Formula
Periodicity Amount Percentage Formula
Periodicity Amount Percentage Formula
Formula
(b) Prepare the adjusting entry at March 31 to record bad debts expense.
Mar 31 Account title Amount
Account title Amount
Current estimated uncollectible amount: Amount
Current credit balance: Amount
Required amount of journal entry: Formula
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