Reference no: EM132322393

Question

MountainGear Inc. has the following accounts receivable:

Total Accounts Receivable:

450,000

After an analysis of their receivables, MountainGear has determined the following aging:

Of the total amount, $450,000:

AGING % UNCOLLECTIBLE

35% is current 8%

20% is 31-60 days past due 12%

15% is 61-90 days past due 22%

10% is 91-120 days past due 35%

8% is 121-150 days past due 52%

7% is 151-180 days past due 55%

5% is over 180 days past due 65%

Based on the above information, make an aging schedule and determine the amount of uncollectible accounts.

Create the journal entry to record the uncollectible amount assuming there is no balance in the allowance for doubtful accounts.

Now assume that there is a debit balance of $1,250 in the allowance for doubtful accounts. Prepare the appropriate journal entry for the uncollectible amount.

1) $94,095

2)Bad Debit Expense 94,095

Allowance for DA 0

3) Bad Debit Expense 94,095

Allowance for DA 1,250