Aging Accounts Receivable:

Madariaga Campany's accounts receivable reveal the following balances:

current 840,000
1-30 days past due 405,000
31-60 days past due 95,000
61-90 days past due 60,000
91-120 days past due 11,000

The credit balance in Allowance for Bad debts is now 38,000. After a thorough analysis of its collection history, the company estimates that the following percentages of receivables will eventually prove uncollectible:

current 0.5%
1-30 days past due 3.5%
31-60 days past due 15.0%
61-90 days past due 55.0%
91-120 days past due 94.0%

PREPARE AN AGING SCHEDULE FOR THE ACCOUNTS RECEIVABLE, AND GIVE THE JOURNAL ENTRY FOR RECORDING THE NECESSARY CHANGE IN THE ALLOWANCE FOR BAD DEBTS ACCOUNT.

To prepare an aging schedule for the accounts receivable, you need to categorize the balances based on the number of days past due. Here's how you can calculate the total amount for each category:

1. Calculate the total amount for each category based on the given balances:
- Current: $840,000
- 1-30 days past due: $405,000
- 31-60 days past due: $95,000
- 61-90 days past due: $60,000
- 91-120 days past due: $11,000

2. Now, multiply each category's balance by its respective uncollectible percentage:
- Current (0.5%): $840,000 * 0.005 = $4,200
- 1-30 days past due (3.5%): $405,000 * 0.035 = $14,175
- 31-60 days past due (15%): $95,000 * 0.15 = $14,250
- 61-90 days past due (55%): $60,000 * 0.55 = $33,000
- 91-120 days past due (94%): $11,000 * 0.94 = $10,340

3. Subtract the calculated uncollectible amounts from each category to determine the net amount:
- Current: $840,000 - $4,200 = $835,800
- 1-30 days past due: $405,000 - $14,175 = $390,825
- 31-60 days past due: $95,000 - $14,250 = $80,750
- 61-90 days past due: $60,000 - $33,000 = $27,000
- 91-120 days past due: $11,000 - $10,340 = $660

4. Sum up the net amounts for each category to get the total accounts receivable balance after estimating the uncollectible amounts:
$835,800 + $390,825 + $80,750 + $27,000 + $660 = $1,334,035

Now, to record the necessary change in the Allowance for Bad Debts account, you will need to make an adjusting journal entry. Assuming the current balance in the Allowance for Bad Debts account is $38,000, here's the journal entry:

Debit: Bad Debt Expense ($1,334,035 - $38,000) = $1,296,035
Credit: Allowance for Bad Debts ($1,296,035)

The above entry increases the Bad Debt Expense by the estimated uncollectible amount and also increases the Allowance for Bad Debts to reflect the estimated net realizable value of the accounts receivable.