Adjusting Journal Entry for Uncollectible Accounts
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Sullivan Co.'s accounts receivable show the following balances by age:
Age of Receivable Balance
0-30 days $600,000
31-60 days 175,000
61-120 days 70,000
more than 120 days 10,000
The credit balance in the allowance for uncollectible accounts is $2,500. Sullivan Co. uses the following percentages to compute the estimated amounts of receivables that will eventually prove uncollectible: 0-30 days, 0.7%; 31-60 days, 1.2%; 61-120 days, 11%; and more than 120 days, 65%.
Required:
Prepare the adjusting journal entry.
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Solution Summary
The solution explains how to pass the adjusting journal entry for uncollectible accounts.
Solution Preview
We first calculate the total amount of bad debt based on the percentages given
Age of Receivable Balance %age uncollectible Amount
0-30 days 600,000 ...
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