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Prepare the journal entries to account for bad debt expense

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Question - Summer Co. Ltd has accounts receivable of $100,350 at 30 June. Credit terms are 2/10, n/30. At this date, Allowance for Doubtful Accounts has a credit balance of $1,234 prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The Company's estimate of bad debts is shown below.

Age of Accounts

Balance, April 30

Estimated Percentage Uncollectible

1-30 days

$68,000

2.00%

31-60 days

22,300

5.00%

61-90 days

5,500

20.00%

Over 90 days

4,550

50.00%

Required -

1. Prepare the journal entries to account for bad debt expense for the period.

2. Work out the cash/net realisable value of Account receivable at 30 June.

Reference no: EM133185094

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