Credit Losses Based on Accounts Receivable Hunter, Inc. analyzed its accounts receivable balances at Dec. 31, and
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Credit Losses Based on Accounts Receivable Hunter, Inc. analyzed its accounts receivable balances at Dec. 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectable:
Age Group | Balance | Probability of Noncollection |
0-30 days past due | $90,000 | 1 |
31-60 days past due | 20,000 | 2 |
61-120 days past due | 11,000 | 6 |
121-180 days past due | 6,000 | 10 |
Over 180 days past due | 5,000 | 25 |
$132,000 |
The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $820 on December 31, before any adjustments.
a. Prepare the adjusting entry for estimated credit losses on December 31.
b. Prepare the journal entry to write off the Rose Company's account on April 10 of the following year in the amount of $625.
Related Book For
Small Business Management Launching & Growing Entrepreneurial Ventures
ISBN: 978-1133947752
17th edition
Authors: Justin Longenecker, William Petty, Leslie Palich, Frank Hoy
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