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 $ 820,000 Not yet due 1.25% 328,000 1 to 30 days past due 2.00 65,600 31 to 60 days past due 6.50 32,800 61 to 90 days past due 32.75 13,120 Over 90 days past due 68.00 2. Prepare the adjusting entry to record bad debts expense at December 31. (Round percentage answers to nearest whole percent. Do not round intermediate calculations.)
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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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 |
|---|---|---|
| $ 820,000 | Not yet due | 1.25% |
| 328,000 | 1 to 30 days past due | 2.00 |
| 65,600 | 31 to 60 days past due | 6.50 |
| 32,800 | 61 to 90 days past due | 32.75 |
| 13,120 | Over 90 days past due | 68.00 |
2. Prepare the
Expenses-
Expense is a cost incurred in the course of conducting business, such as selling and distributing a product from a producer to a final consumer. There are two types of expenses: direct and indirect.
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