Walt's manufactures and sells customized work clothes and uniforms. Following is a list of accounts receivable as
Question:
Walt's manufactures and sells customized work clothes and uniforms. Following is a list of accounts receivable as of December 31, 2010.
(a) Sort the receivables list by age category and determine the estimated balance of uncollectible accounts. Walt's believes the following rates of noncollection will occur: 1% of receivables up to 30 days, 3% for 31 to 90 days, 10% for 91 to 180 days, and 40% of accounts over 180 days.
(b) If the balance of Allowance for Uncollectible Accounts contained $15,000 (credit), what adjusting entry is needed to reflect the analysis from part (a).
(c) If the balance of Allowance for Uncollectible Accounts contained $15,000 (debit), what adjusting entry is needed to reflect the analysis from part (a).
(d) Howis it possible that the allowance account could contain a debit balance, as in part (c)?
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