Xanadu Ltd has accounts receivable totalling 142 800 and

a 3 640 #201
Xanadu Ltd. has accounts receivable totalling $142,800 and a $3,640 credit balance in its
allowance for doubtful accounts prior to adjustment on December 31, 2011. The company uses
an aging analysis of its receivables as the basis for estimating its uncollectible accounts.The
aging analysis shows the following: Month of Sale Accounts Receivable on Dec.
31December…………………………… $ 91,000November…………………………… 26,040September an
October…………….. 16,800July and August…………………….. 8,960$142,800The company's estimates
bad debts are as follows:Age of Accounts Estimated % UncollectibleCurrent……………………………
2%1-30 days past due……………….. 12%31-90 days past due………………. 25%Over 90 days past
due……………. 40%Required:a. Determine the total estimated uncollectibles as at December 31.b.
Prepare the adjusting entry for the expected bad debts expense as at December 31, 2011.View
Solution:
Xanadu Ltd has accounts receivable totalling 142 800 and a 3 640

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