Ingles Company has accounts receivable of $93,100 at March 31. An analysis of the accounts shows the information.
Month of Sale Balance, March 31
March …………………$60,000
February ……………… 17,600
January ……………….. 8,500
Prior to January ………. 7,000
$93,100
Credit terms are 2/10, n/30. At March 31, Allowance for Doubtful Accounts has a credit balance of $1,200 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.
Estimated Percentage
Age of Accounts Uncollectible
1–30 days…………….…. 2.0%
31–60 days……………… 5.0%
61–90 days……………… 30.0%
Over 90 days……………. 50.0%
Instructions
(a) Determine the total estimated uncollectibles.
(b) Prepare the adjusting entry at March 31 to record bad debts expense.