Nadire Company has a December 31 year-end. The company uses the aging method to estimate bad debts
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Question:
Nadire Company has a December 31 year-end. The company uses the aging method to estimate bad debts at year-end. For interim reporting, the company uses the percentage-of-sales method because it is simpler.
In March of 2022, the company identified a $109,000 receivable from Woodscreen Inc. as uncollectible. Upon further consideration, staff concluded that the write-off should have occurred in the 2021 fiscal year because the information about the uncollectibility of the account was available at the time. The general ledger accounts for 2021 have already been closed.
Required:
a. Record the entry to write-off the uncollectible account
b. Record any adjusting journal entries necessary to correct the error in Nadire's accounts receivable.
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