E5-28A. (Learning Objective 4: Using the aging approach to estimate bad debts) On December 31, before any year-end adjustments, the Accounts Receivable balance of Athens Company is $260,000. The Allowance for Doubtful Accounts has a $12,500 credit balance.

Athens Company prepares the following aging schedule for Accounts Receivable:

Requirements 1. Based on the aging of accounts receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?
2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.
3. Show how Athens Company will report Accounts Receivable on its December 31 Balance Sheet.

Age of Accounts Total Balance 1-30 Days 31-60 Days 61-90 Days Over 90 Days $210,000 $100,000 $80,000 $50,000 $30,000 Estimated uncollectible 0.5% 2.0% 5.0% 50.0%