A company uses the aging of accounts receivable method to estimate its bad debts expense. On December 31 of the current year, an aging analysis of accounts receivable revealed the following:
Accounts Receivables The Account Age Estimated Uncollectible
$620,000 Not due yet 1%
270,000 1-30 days overdue 5
145,000 31-60 days overdue 10
55,000 61-90 days overdue 30
32,000 91-120 days overdue 40
18,000 Over 120 days overdue 60
Total of 1,140,000
Using the information in the chart above, complete the following: Calculate the amount of the Allowance for doubtful accounts that should be reported on the current year-end balance sheet.Calculate the amount of the Bad Debts Expense that should be reported on the current year’s income statement, assuming that the balance of the Allowance for Doubtful Accounts on January 1 of the current year was $50,000 and that accounts receivable written off during the current year totaled $55,000.Prepare the adjusting entry to record bad debts expense on December 31 of the current year.Show how Accounts Receivable will appear on the current year-end balance sheet as of December 31.
Important: Be sure your submission also shows how you calculated and reached the final total for each of the above questions.