Reference no: EM132617881

A company has the following unadjusted account balances at December 31, of the current year; Accounts Receivable of $185,700 and Allowance for Doubtful Accounts of $1,600 (credit balance). The company uses the aging of accounts receivable to estimate its bad debts.

The following aging schedule reflects its accounts receivable at the current year-end:

Account Age                                   Balance

                                  Estimated Uncollectible                          Percentage

Current (not yet due)            $ 96,000                                          1 %

1 - 30 days past due               64,000                                         3.5 %

31 - 60 days past due               16,000                                       12 %

61 - 90 days past due               6,500                                         42 %

Over 90 days past due               3,200                                      67 %

Total                                       $ 185,700

Required:

Problem 1. Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet.

Problem 2. Prepare the adjusting journal entry to record bad debts expense for the current year.