Leland Hotels has accounts receivable of $98,100 at March 31. An analysis of the accounts shows the following:

Month of Sale

Balance, March 31

March

$65,000

February

17,600

January

8,500

Prior to January

7,000

 

$98,100

Credit terms are 2/10, n/30. On 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

2.0%

30–60 days

5.0%

60–90 days

30.0%

Over 90 days

50.0%

Instructions

(a) Determine the total estimated uncollectible.

(b) Prepare the adjusting entry at March 31 to record bad debts expense.