Explain smoot company accounts receivable

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Reference no: EM13511369

Smoot Company's accounts receivable reveal the following balances:

Age of Accounts Receivable Balance

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $720,000
1-30 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395,000
31-60 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000
61-90 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,000
91-120 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000

The credit balance in Allowance for Bad Debts is now $42,000. After a thorough analysis of its collection history, the company estimates that the following percentages of receivables will eventually prove uncollectible:

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5%
1-30 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0
31-60 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.0
61-90 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.5
91-120 days past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.0

Prepare an aging schedule for the accounts receivable, and give the journal entry for recording the necessary change in the allowance for bad debts account.

Reference no: EM13511369

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