Question

NAME B) At December 31, 2018 before any year-end adiustments, the Accounts Receivable balance of Houston Inc. is $330,000. The Allowance for Uncollectible Accounts has a $15,400 credit balance. Houston prepares the following aging schedule for Accounts Receivable: Days Outstanding 1-30days 31-60days 61-90days Over 90 days Estimated Uncollectible 0.6% 3.0 % 5.0% 40.0% Balance $130,000 $100,000 $ 70,000 $30,000 REQUIRED: Make the entry required by the aging schedule and prepare a T-account for the allowance. Also, show how Houston will prepare Accounts Receivable on its December 31 balance sheet. Calculation for Bad Debts Expense and T-Account for the Allowance Account:

Answer 1

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Houston Inc.
Calculation of bad debt expense:						Allowance for uncollectible account
	A	B	C=A*B			Date	Account	Debit $	Date	Account	Credit $
Days Past due	Balance	% uncollectible	Uncollectible amount			31-Dec-18	Closing Balance	19,280.00	31-Dec-18	Opening Balance	15,400.00
1-30 days	130,000.00	0.6%	780.00						31-Dec-18	Bad debt expense	3,880.00
31-60 days	100,000.00	3%	3,000.00					19,280.00			19,280.00
61-90 days	70,000.00	5%	3,500.00						1-Jan-19	Opening Balance	19,280.00
Over 90 days	30,000.00	40%	12,000.00
Total	330,000.00		19,280.00				Balance Sheet			Amount $
Balance in allowance for uncollectible account			15,400.00				Accounts Receivable			330,000.00
Bad debt expense			3,880.00				Less: Allowance for uncollectible account			19,280.00
							Accounts Receivable (net)			310,720.00