Ingles Company has accounts receivable of $93,100 at March 31. An analysis of the accounts shows the following.
Month of SaleBalance, 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.
|
Age of Accounts |
Estimated Percentage Uncollectible |
|
1-30 days |
2% |
|
31-60 days |
5% |
|
61-90 days |
30% |
|
Over 90 days |
50% |
Instructions:
a. Determine the total estimated uncollectibles.
b. Prepare the adjusting entry at March 31 to record bad debts expense.