Acc400 Financial Accounting: E8-5 Hachey Company has accounts receivable

Acc400 Financial Accounting
Week 2 Individual

E8-5
Hachey Company has accounts receivable of $95,100 at March 31, 2007. An analysis of the accounts shows these amounts.
Balance, March 31
Month of Sale 2007 2006
March $65,000 $75,000
February 12,600 8,000
December and January 10,100 2,400
November and October 7,400 1,100
$95,100 $86,500

Credit terms are 2/10, n/30. At March 31, 2007, there is a $2,200 credit balance in Allowance for Doubtful Accounts prior to adjustments. The company uses the percentage of receivables basis for estimating uncollectible accounts.

Estimated Percentage

Age of Accounts Uncollectible

Current 2%

1–30 days past due 7

31–90 days past due 30

Over 90 days 50

Instructions:
1. Determine the total estimated uncollectibles.
2. Prepare the adjusting entry at March 31, 2007, to record bad debts expense.
3. Discuss the implications of the changes in the aging schedule from 2006 to 2007.
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