Problem 9-3A (Algo) Aging accounts receivable and accounting for bad debts LO P2, P3 Skip to question [The following information applies to the questions displayed below.] On December 31, Jarden Company's Allowance for Doubtful Accounts has an unadjusted credit balance of $14,500. Jarden prepares a schedule of its December 31 accounts receivable by age. Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $ 800,000 Not yet due 1.20% 320,000 1 to 30 days past due 1.95 64,000 31 to 60 days past due 6.45 32,000 61 to 90 days past due 32.50 12,800 Over 90 days past due 67.00 Problem 9-3A (Algo) Part 1 Required: 1. Compute the required balance of the Allowance for Doubtful Accounts at December 31 using an aging of accounts receivable.

Respuesta :

Algo Corporation's required balance for the Allowance for Doubtful Accounts as of December 31 is $38,944.

Data and Calculations:

Allowance for doubtful accounts (credit) =$14,500

Age Analysis of Accounts Receivable

Accounts Receivable   Age of Accounts Expected Percent    Allowance

                                          Receivable         Uncollectible     for Uncollectible

$ 800,000                   Not yet due                       1.20%              $9,600

$ 320,000                   1 to 30 days past due       1.95                   6,240

$ 64,000                     31 to 60 days past due     6.45                   4,128

$ 32,000                     61 to 90 days past due   32.50                10,400

$ 12,800                      Over 90 days past due   67.00                 8,576

$1,228,800                                                                                 $38,944

Analysis:

Bad Debts $24,444 Allowance for Doubtful Accounts $24,44

Thus, the required balance for the Allowance for Doubtful Accounts of Algo Corporation as of December 31 is $38,944.

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