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The Tigers need to record a journal entry to estimate their bad debt expense for the period
The Tigers need to record a journal entry to estimate their bad debt expense for the period. The A/R aging shows a total of $750,000 in Accounts Receivable, which is broken down as follows in age: $500,000 is 0 - 30 days old: $200,000 is 31 - 60 days old; and $50.000 is over 60 days old. Under the aging of receivables approach for estimating bad debt expense, the Tigers expect the following uncollectible %'s: 1% of the A/R that is 0 - 30 days old: 14% of the A/R amounts 31 - 60 days old, and 23% of the A/R amount past due for more than 60 days. The Allowance for Uncollectible A/R account currently has a beginning debit balance of $1,000. What amount will be credited to the Allowance for Uncollectible A/R account for this joumal entry Fill in the blank with your calculated number. DO NOT include commas. S signs, period, decimal points, etc. just enter the raw number. Webcourses will add commas to your answer automatically. For example, if you calculated the answer to be $24.123, you would only input: 24123
Expert Solution
Answer as below:
| Ageing | Accounts receivable ageing (A) | % uncollectible (B) | Allowance for bad debts (A*B) |
| 0-30 days old | $ 500,000 | 1% | $ 5,000 |
| 31-60 days old | $ 200,000 | 14% | $ 28,000 |
| >60 days old | $ 50,000 | 23% | $ 11,500 |
| Total | $ 750,000 | $ 44,500 |
Bad debts to recognise: Closing allowance for bad debts (Credit) - Opening allowance for bad debts (Credit)
=44500 - (-1000 opening debit balance in Allowance for bad debts account)
Amount credited to allowance for uncollectible A/R account =45500
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