3. (10 marks) Power Company has a balance of $420,000 in Accounts Receivable. They have prepared...

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3. (10 marks) Power Company has a balance of $420,000 in Accounts Receivable. They have prepared an aging schedule as follows: Current 1- 60 days past due 61-180 days past due Over 180 days past due Total $346,000 48,000 17,000 9,000 $420,000 Based on past experience losses are estimated to be: 1% of current balances; 5% of balances 1 – 60 days past due; 15% of balances 61 – 180 days past due; and 40% of balances over 180 days past due. Required: a. What is your estimate of the appropriate balance in the allowance for uncollectible accounts? That is, what should the balance be? b. After writing off actual uncollectible accounts the actual balance in the allowance for uncollectible accounts was only $2,600. Provide the adjusting journal entry needed. 3. (10 marks) Power Company has a balance of $420,000 in Accounts Receivable. They have prepared an aging schedule as follows: Current 1- 60 days past due 61-180 days past due Over 180 days past due Total $346,000 48,000 17,000 9,000 $420,000 Based on past experience losses are estimated to be: 1% of current balances; 5% of balances 1 – 60 days past due; 15% of balances 61 – 180 days past due; and 40% of balances over 180 days past due. Required: a. What is your estimate of the appropriate balance in the allowance for uncollectible accounts? That is, what should the balance be? b. After writing off actual uncollectible accounts the actual balance in the allowance for uncollectible accounts was only $2,600. Provide the adjusting journal entry needed.

Answer rating: 100% (QA)

Power Company Allowance for Uncollectible Accounts Calculation and Adjustment a Estimate of t... View the full answer