Allowance method for doubtful accounts
Steelhead Company supplies flies and fishing gear to sporting goods stores and outfitters throughout the western United States. The accounts receivable clerk for Steelhead prepared the following partially completed aging-of-receivables schedule as of the end of business on December 31, 2008.
Days Past Due Not Past Over
Customer Balance Due 1 – 30 31 – 60 61 – 90 91 – 120 120
|
Alexandria Fishery |
15,000 |
15,000 |
|
Cutthroat Sports |
5,500 |
5,500 |
|
Yellowstone Sports |
2,900 |
2,900 |
Totals 895,900 454,800 249,500 101,700 33,900 32,100 23,900
|
Customer |
Due Date |
Balance |
|
Baitfish Sports & Flies |
21-Jun-07 |
$1,750 |
|
Kiwi Flies |
9-Sep-07 |
$650 |
|
Adams Co. |
30-Sep-07 |
$1,500 |
|
Bailey Sports |
17-Oct-07 |
$600 |
|
Prince Sports |
18-Nov-07 |
$950 |
|
Cahill Co. |
28-Nov-07 |
$2,000 |
|
Wintson Company |
1-Dec-07 |
$2,250 |
|
Goofus Bug Sports |
6-Jan-08 |
$6,200 |
Steelhead Company has a past history of uncollectible accounts by age category.
Age Class Percent Uncollectible Not past due 2%
1-30 days past due 5
31-60 days past due 10
61-90 days past due 25
91-120 days past due 45
Over 120 days past due 90
Instructions:
1. Determine the number of days past due for each of the preceding accounts.
2. Complete the aging-of-receivables schedule.
3. Estimated the allowance for doubtful accounts, based on the aging-of-receivables schedule.
4. Assume that the allowance for doubtful accounts for Steelhead Company has a debit balance of $3,199 before adjustment on December 31, 2007. Journalize the adjusting entry for uncollectible accounts.