During 2012, Slainge Corporation had a total of $8,000,000 in sales, of which 85% were on credit. At year end, the Accounts Receivable balance showed a total of $3,600,000, which had been aged as follows:
Age Amount
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,100,000
1–30 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
31–60 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
61–90 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Over 90 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
$3,600,000
Prepare the journal entry required at year end to record the bad debt expense under each of the following independent conditions. Assume, where applicable, that Allowance for Bad Debts had a credit balance of $9,500 immediately before these adjustments.
Required:
1. Based on experience, uncollectible accounts existing at year end are estimated to be 2.5% of total accounts receivable.
2. Based on experience, uncollectible accounts are estimated to be the sum of:
1% of current accounts receivable
7% of accounts 1–30 days past due
12% of accounts 31–60 days past due
21% of accounts 61–90 days past due
35% of accounts over 90 days past due
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