At December 31, 2014, before any year-end adjustments, the Accounts Receivable balance of Digital Electronics Company...

 

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At December 31, 2014, before any year-end adjustments, the Accounts Receivable balance of Digital Electronics Company Clinic is $236,000. Allowance for Uncollectible Accounts has an $8,148 credit balance. Digital Electronics Company prepares the following aging schedule for accounts receivable: (Click the icon to view the aging schedule.) Required 1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? Is it too high or too low? 2. Make the entry required by the aging schedule. Prepare a T-account for the allowance. 3. Show how Digital Electronics Company will report Accounts Receivable on its December 31 balance sheet. Include the two accounts that come before receivables on the balance sheet, using assumed amounts. Requirement 1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? Is it too high or too low? Before we can assess whether the current balance of the allowance account is adequate, we first have to calculate a revised allowance for uncollectible accounts amount. (Round to the nearest dollar.) Allowance for uncollectible accounts: Credit balance needed 0-30 31-60 61-90 Over 90 $ 773 5,423 5,021 1,506 $ 12,723 (8,148) $ 4,575 Subtotal Less: Unadjusted balance Adjusting entry amount The credit balance at December 31 in Allowance for Uncollectible Accounts should be $12723. The current balance is $8148. Thus, the current balance of the allowance account is too high At December 31, 2014, before any year-end adjustments, the Accounts Receivable balance of Digital Electronics Company Clinic is $236,000. Allowance for Uncollectible Accounts has an $8,148 credit balance. Digital Electronics Company prepares the following aging schedule for accounts receivable: (Click the icon to view the aging schedule.) Required 1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? Is it too high or too low? 2. Make the entry required by the aging schedule. Prepare a T-account for the allowance. 3. Show how Digital Electronics Company will report Accounts Receivable on its December 31 balance sheet. Include the two accounts that come before receivables on the balance sheet, using assumed amounts. Requirement 1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? Is it too high or too low? Before we can assess whether the current balance of the allowance account is adequate, we first have to calculate a revised allowance for uncollectible accounts amount. (Round to the nearest dollar.) Allowance for uncollectible accounts: Credit balance needed 0-30 31-60 61-90 Over 90 $ 773 5,423 5,021 1,506 $ 12,723 (8,148) $ 4,575 Subtotal Less: Unadjusted balance Adjusting entry amount The credit balance at December 31 in Allowance for Uncollectible Accounts should be $12723. The current balance is $8148. Thus, the current balance of the allowance account is too high

Answer rating: 100% (QA)

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