The Family Place Kitchen is a small chain of kitchen remodeling stores. The company's year-end trial balance on December 31, 2019, included the information shown below:

Accounts Receivable..................................................$495,220

Allowance for Doubtful Accounts (credit)...................14,100

Net credit sales for 2019 were $4,450,000. Allowance for Doubtful Accounts has not yet been adjusted.

INSTRUCTIONS

1. At the end of 2019, the following additional accounts receivable are deemed uncollectible:

Hayward Anderson......................................$ 5,400

Richard Bennett..............................................1,090

Donald O€™Brian................................................2,100

Sergio Tirado...................................................2,615

Columbus Wilkerson......................................1,550

Total.............................................................$12,755

Prepare the December 31, 2019, journal entry to write off the above accounts. Of the accounts to be charged off, $8,600 are more than 60 days past due and $4,155 are from 31 to 60 days past due. Post this transaction to the T-accounts for Accounts Receivable and Allowance for Doubtful Accounts.

2. Assume that the company uses the percentage of sales method to estimate uncollectible accounts expense. After analyzing the prior year€™s activities, management determined that losses from uncollectible accounts for 2019 should be 0.32 percent of net credit sales. Prepare the necessary adjusting journal entry. Round calculations to the nearest dollar.

3. Assume that the company uses the aging of accounts receivable method. The following information was furnished by the credit manager for use in calculating the estimated loss from uncollectible accounts. The balances of accounts were computed prior to the charge-offs in Instruction 1.

Compute the estimated uncollectible accounts as of December 31, 2019, rounded to the nearest dollar.

4. Prepare the necessary adjusting journal entry to record the estimated uncollectible accounts expense on December 31 using the aging method. Post this entry to the T-accounts for Accounts Receivable and Allowance for Doubtful Accounts.

Analyze: If a company has used three different methods for estimating uncollectible accounts for the past three years, which basic accounting principle may have been violated? Why?

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Balances of Accounts (before charge-offs) Recelvable Category Estimated Loss Rate 1% 5% 10% $405,000 45,000 24,700 20,520 $495,220 Current 1-30 days past due 31-60 days past due Over 60 days past due Total 40%