Question

adjusting entry amount $ 7,300
based on the aging of accounts receivable, is the unadjusted balance of the allowance account adequate? too high? too low?
the unadjusted balance of the allowance account is too low.
requirement 2. make the entry required by the aging schedule. prepare a t - account for the allowance.
first, make the entry required by the aging schedule. (record debits first, then credits. exclude explanations from any journal entries.)
date accounts debit credit
december 31
aging schedule
age of accounts
1 - 30 days 31 - 60 days 61 - 90 days over 90 days
accounts receivable total balance of $370,000 $150,000 $110,000 $70,000 $40,000
estimated uncollectible 0.6% 5.0% 9.0% 60.0%

Explanation:

Step1: Calculate the estimated uncollectible amount

For 1 - 30 days: $\$150000\times0.6\%=\$900$
For 31 - 60 days: $\$110000\times5.0\%=\$5500$
For 61 - 90 days: $\$70000\times9.0\%=\$6300$
For over 90 days: $\$40000\times60.0\%=\$24000$
Total estimated uncollectible = $\$900+\$5500+\$6300+\$24000=\$36700$

Step2: Determine the adjustment amount

The adjusting entry amount is $\$7300$. Let the unadjusted balance of the allowance account be $x$.
We know that $x + 7300=36700$ (because the adjusted allowance balance should be the estimated uncollectible amount). So $x = 36700 - 7300=\$29400$ (unadjusted balance). But since the unadjusted balance is too low, we need to make the adjusting entry.

The adjusting entry is:
Debit Bad Debt Expense $\$7300$
Credit Allowance for Doubtful Accounts $\$7300$

Answer:

Date	Accounts	Debit	Credit
	Allowance for Doubtful Accounts		$7300$