From inception of operations to December 31, 2015, Harris Corporation provided for uncollectible accounts receivable under the

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From inception of operations to December 31, 2015, Harris Corporation provided for uncollectible accounts receivable under the allowance method. Provisions were made monthly at 2% of credit sales; bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account; and no year-end adjustments to the allowance account were made. Harris€™s usual credit terms arc net 30 days.
The balance in the Allowance for Doubtful Accounts was $130,000 at January 1, 2016. During 2016, credit sales totaled $9,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, $90,000 of bad debts were written off, and recoveries of accounts previously written off amounted to $15,000. Harris upgraded its computer facility in November 2016, and an aging of accounts receivable was prepared for the first time as of December 31, 2016. A summary of the aging is as follows:
From inception of operations to December 31, 2015, Harris Corporation

Based on the review of collectibility of the account balances in the €œprior to 1/1/2016" aging category, additional receivables totaling $60,000 were written off as of December 31, 2016. Effective with the year ended December 31, 2016, Harris adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year end aging analysis of accounts receivable.
Required:
1.
Prepare a schedule analyzing the changes in the allowance for doubtful accounts for the year ended December 31, 2016. Show supporting computations in good form.
2. Prepare the journal entry for the year-end adjustment to the Allowance for Doubtful Accounts balance as of December 31, 2016.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting Reporting and Analysis

ISBN: 978-1285453828

2nd edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

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