Accounting $301$ In$-$class activity $5$ March $18,2023$

From inception of operations to December $31,2025,$ Peecan Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account; and no year$-$end adjustments to the allowance account were made. Peecan$$s usual credit terms are net $30$ days.

The balance in Allowance for Doubtful Accounts was $$86,000$ at January $1,2025.$ During $2025,$ credit sales totaled $$6,200,000,$ interim provisions for doubtful accounts were made at $$62,000,$ $$47,000$ of bad debts were written off, and recoveries of accounts previously written off amounted to $$3,000($this can be accounted for by debiting Cash and crediting Allowance for Doubtful Accounts$).$ Peecan installed a computer system in November $2025,$ and an aging of accounts receivable was prepared for the first time as of December $31,2025.$ A summary of the aging is as follows:

Classification by

Month of Sale Balance in

Each Category Estimated $\%$

Uncollectible

November$-$December $2025$ $$760,0001\%$

July$-$October $201,0008\%$

January$-$June $89,00030\%$

Prior to $1/1/202580,00090\%$

$$1,130,000$

Based on the review of collectibility of the account balances in the $$prior to $1/1/2025$ aging category, additional receivables totaling $$30,000$ were written off as of December $31,2025.$ The $90\%$ uncollectible estimate applies to the remaining $$50,000$ in the category. Effective with the year ended December $31,2025,$ Peecan adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year$-$end aging analysis of accounts receivable.

Instructions

a$.$ Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December $31,2025.$ Show supporting computations in good form. $($Hint: In computing the $12/31/2025$ allowance, subtract the $$30,000$ write$-$off$).$

b$.$ Prepare the journal entry for the year$-$end adjustment to the Allowance for Doubtful Accounts balance as of December $31,2025.$

c$.$ Show the Accounts Receivable balance, net of Allowance for Doubtful Accounts as of December $31,2025.$

d$.$ Based on the information provided, using a T$-$account format, analyze all of the activity that occurred in Accounts Receivable and Allowance for Doubtful Accounts during $2025.$ If there are balances or other activity not provided make a note of that in the T$-$account.