On December 31, 2019, James Corporation has an Accounts Receivable balanced of $280,000 before any adjustments. The Allowance for bad debts has a normal balance of $1,200. The company prepared the following aging schedule:

A) Determine the required addition to the allowance for bad debts and record in the first set of T accounts.

B) Record a write-off of $2,500 and determine the new balance in the allowance account in the first set of T accounts.

C) In the second set of T accounts, record the needed addition to the allowance if the beginning balance were $(2,300). You do not have to record the $2,500 write off.

D) In the third set of T accounts, record the addition to the allowance for bad debts if the company used the percentage of sales method. Sales for 2019 were 600,000 and past experience indicates that 1% of net sales will be uncollectible.

Transcribed Image Text:

1-30 days 31-60 61-90 > 90 116,000 81,000 59,000 33,000 289,000 % uncollectible 0.50% 2% 5% 15% 1-30 days 31-60 61-90 > 90 116,000 81,000 59,000 33,000 289,000 % uncollectible 0.50% 2% 5% 15%

Answer rating: 100% (QA)

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