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 allowance method and the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a CHF1,600 credit.
(c) Of the above accounts, CHF1,100 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts.
(d) The company subsequently collects CHF700 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 principle.

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Worksheet.xls Review Page Layout Formulas Home Insert Data View P18 fx Number of Days Outstanding Total 31-60 3 91-120 Over 120 0-30 61-90 Accounts receivable 4 CHF15,000 CHF383,000 CHF220,000 CHF90,000 CHF18,000 CHF40,000 % uncollectible Estimated bad debts 3% 5% 8% 10%