Using the data in Exercise 911 assume that the allowance for

Using the data in Exercise 9-11, assume that the allowance for doubtful accounts for Performance Bike Co. had a debit balance of $28,400 as of December 31. Journalize the adjusting entry for uncollectible accounts as of December 31.

Percent Age Interval Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due Uncollectible 0.8% 2.4 7.0 18.0 34.0 85.0 Balance $3,250,000 1,050,000 780,000 320,000 240,000 150,000 $5,790,000

Solution

Age interval Amount % uncollectible Allowance Not past due 3250000 0.80% 26000 1-30 days 1050000 2.40% 25200 31-60 days 780000 7% 54600 61-90 days 320000 18% 57600 91-180 days 240000 34% 81600 Over 180 days 150000 85% 127500 Total 5790000 372500 Adjusting entry: 31-Dec Bad debts expense 400900 =372500+28400        Allowance for doubtful accounts 400900