The attached represents selected information taken from a company's aging schedule
to estimate uncollectible accounts receivable at year end.
Number of Days Outstanding
Total 0-30 31-60 61-90 91-120 Over 120
Accounts receivable $260,000 $100,000 $60,000 $50,000 $30,000 $20,000
% uncollectible 1% 5% 7.5% 10% 12%
Estimated bad debts
(a) Calculate the total estimated bad debts based on the above information.
(b) Prepare the year-end adjusting journal entry to record the bad debts using the allowance method and the aged uncollectible accounts receivable determined in (a). Assume the opening balance in the Allowance for Doubtful Accounts account is a $10,000 credit.
(c) Of the above accounts, $2,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts.
(d) The company subsequently collects $1,000 on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
(e) Explain how establishing an allowance account satisfies the matching principle.© BrainMass Inc. brainmass.com June 3, 2020, 8:14 pm ad1c9bdddf
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