Bailey's Manufacturing Company is looking at changing their method of reporting bad debts expense. In past years the company has been able to use the direct write off method but have experienced significant growth in recent years. The accountants have prepared the following aging schedule based upon their current accounts receivable volume.
Required:
1) Using the above information compute the estimated amount of uncollectible receivables.
2) Prepare the journal entry to record the estimated uncollectibles.
3) Instead of the aging method compute the estimated bad debts to be:
a) 2.5% of net credit sales.
b) 3.5% of gross accounts receivable

Question

Bailey's Manufacturing Company is looking at changing their method of reporting bad debts expense. In past years the company has been able to use the direct write off method but have experienced significant growth in recent years. The accountants have prepared the following aging schedule based upon their current accounts receivable volume. 
Required:
1) Using the above information compute the estimated amount of uncollectible receivables.
2) Prepare the journal entry to record the estimated uncollectibles.
3) Instead of the aging method compute the estimated bad debts to be:
a) 2.5% of net credit sales.
b) 3.5% of gross accounts receivable

Quizplus · Accepted Answer

The Answer of Bailey's Manufacturing Company is looking at changing their method of reporting bad debts expense. In past years the company has been able to use the direct write off method but have experienced significant growth in recent years. The accountants have prepared the following aging schedule based upon their current accounts receivable volume. 
Required:
1) Using the above information compute the estimated amount of uncollectible receivables.
2) Prepare the journal entry to record the estimated uncollectibles.
3) Instead of the aging method compute the estimated bad debts to be:
a) 2.5% of net credit sales.
b) 3.5% of gross accounts receivable

Bailey's Manufacturing Company Is Looking at Changing Their Method of Reporting