At December 31, 20X0, Oettinger Corporation, a premium kitchen cabinetmaker for the home remodeling industry, reported the following accounts receivable information on its year-end balance sheet:

Gross accounts receivable ........................ $850,000Less:Allowanceforcreditlosses.................(25,000)Accountsreceivable\left(net\right)..........................$825,000

During 20X1, the company had credit sales of $8,200,000,ofwhichitcollected$7,975,000. Oettinger employs the sales revenue approach to estimate its bad debt provisions and, continuing to use the same 1% used in previous years, made the normal adjustment at the end of 20X1.

Although 20X1 started off well, the industry experienced a slowdown in the last four months of the year, and cash collections consequently dropped off substantially. Moreover, a major customer, which owed Oettinger $85,000, unexpectedly filed for bankruptcy and went out of business during November, at which time its account was written off. Oettinger’s controller is concerned that some customers are experiencing cash flow problems and that the company’s allowance for credit losses is too low. Using economic forecasts with historical experience, she prepared the following schedule:

Required:

1. Determine Oettinger’s accounts receivable balance at December 31, 20X1. Prepare a journal entry for each transaction affecting the accounts receivable balance for 20X1.

2. Prepare an aging analysis to compute the required balance in the Allowance for credit losses at December 31, 20X1.

3. Prepare any other required journal entries affecting the Allowance for credit losses for the year ended December 31, 20X1. (Do not duplicate any entries from requirement 1.)

4. Show Oettinger’s balance sheet presentation of accounts receivable at December 31, 20X1.

Number of Days Past Due % of Accounts Estimated % Receivable Balance Collectible 20% 0-30 98% 40 31-60 95 35 61-90 85 91-120 75 2 Over 120 50