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    Accounting for uncollectible accounts - allowance method

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    Accounting for uncollectible accounts using the allowance method, and reporting receivables on the balance sheet

    At September 30, 2012, the accounts of Mountain Terrace Medical Center (MTMC) include the following:

    Accounts receivable $145,000
    Allowance for uncollectible accounts (credit balance) 3,500

    During the last quarter of 2012, MTMC completed the following selected transactions:
    Dec 28
    Wrote off accounts receivable as uncollectible: Regan, Co., $1,300; Owen Mac, $900; and Rain, Inc., $700.
    Dec 31
    Recorded uncollectible account expense based on the aging of accounts receivable, as follows:

    AGE OF ACCOUNTS
    Accounts Receivable 1-30 days 31-60 days 61-90 days over 90 days
    $165,000 $97,000 $37,000 $14,000 $17,000
    Est. % uncollectible .03% 3% 30% 35%

    Requirements
    1. Journalize the transactions.
    2. Open the Allowance for uncollectible accounts T-account, and post entries affecting that account. Keep a running balance.
    3. Show how Mountain Terrace Medical Center should report net accounts receivable on its December 31, 2012 balance sheet. Use the three line reporting format.

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    https://brainmass.com/business/accounting/accounting-for-uncollectible-accounts-allowance-method-476722

    Solution Summary

    This solution illustrates how to compute the allowance for uncollectible accounts using an aging schedule and how to journalize the necessary transactions.

    $2.19

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