Question

The following represents selected information taken from a company’s aging schedule
to estimate uncollectible accounts receivable at year-end.


Instructions
(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 allow-
ance method and the aged uncollectible accounts receivable determined in (a). Assume
the current balance in Allowance for Doubtful Accounts is a $3,000 credit.
(c) Of the above accounts, $1,600 is determined to be specifically uncollectible. Prepare
the journal entry to write off the uncollectible accounts.
(d) The company subsequently collects $700 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 expense recognition


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  • CreatedJanuary 30, 2014
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