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Chapter 07 - In-Class Exercise _2 Solution

# Chapter 07 - In-Class Exercise _2 Solution - 34,860 70...

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Chapter # 7 In-Class Exercises Page 4 of 6 Chapter 07 - In-Class Exercises.doc - 11/15/06) Exercise #2 [a] \$4,800,000 x 1% = \$48,000 Journal entry: Bad debt expense 48,000 Allowance for doubtful accounts 48,000 [b] Days Account Outstanding Amount Probability of Collection Allowance Amount Less than 15 days 268,920 \$ 98% 5,378.40 \$ Between 16 and 30 days 89,640 90% 8,964.00 \$ Between 31 and 45 days 69,720 80% 13,944.00 \$ Between 46 and 60 days
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Unformatted text preview: 34,860 70% 10,458.00 \$ Between 61 and 75 days 19,920 40% 11,952.00 \$ Over 75 days 14,940 2% 14,641.20 \$ Total Allowance Needed 65,337.60 \$ Minus: current balance 15,000.00 Adjustment needed 50,337.60 \$ Journal entry: Bad debt expense 50,337.60 Allowance for doubtful accounts 50,337.60 (c) Journal entry: Allowance for doubtful accounts 13,560 Accounts Receivable 13,560...
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