Presented below is an aging schedule for Halleran Company at December 31, 2023:

Instructions

a. Prepare T accounts for Accounts Receivable and Allowance for Doubtful Accounts and enter the 2023 unadjusted balances.

b. Prepare and post the adjusting entry for uncollectibles at December 31, 2023.

c. Prepare and post the entries for these selected 2024 events and transactions. 1. March 31, a $1,000 customer balance originating in 2023 is judged uncollectible. 2. May 31, a cheque for $1,000 is received from the customer whose account was written off as uncollectible on March 31.

d. Prepare the adjusting entry for uncollectibles on December 31, 2024, assuming that the unadjusted balance in Allowance for Doubtful Accounts is a debit of $800 and the aging schedule indicates that total estimated uncollectibles will be $31,600.

Taking It Further 

Companies often have large amounts of accounts receivable that can lead to large losses from uncollectible accounts. What credit policies could Halleran Company put in place to minimize the amount of bad debts?

Transcribed Image Text:

Customer Anders Blake Coulson Deleon Others Total $ 22,000 40,000 57,000 34,000 132,000 $285,000 Not Yet Due $ 38,610 $ 40,000 16,000 96,000 $152,000 3% Number of Days Past Due 61-90 1-30 31-60 $10,000 $12,000 6,000 16,000 14,000 $32,000 $26,000 6% $35,000 13% Estimated percentage uncollectible Estimated uncollectible accounts $4,560 $ 1,920 $ 3,380 $ 8,750 At December 31, 2023, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $12,000. $35,000 Over 90 25% $34,000 6,000 $40,000 50% $20,000