Problem 2 Ashmore Inc. uses the allowance method to estimate uncollectible accounts receivable. They currently have the following information on their balance sheet: a debit of $200,000 in their Accounts Receivable and a $6,000 credit balance in their Allowance for Doubtful Accounts. The company produced the following aging of the accounts receivable at year end. Number of Days Outstanding Total 0-30 31-60 61-90 91- Over 120 120 Accounts receivable 200,000 77,000 46,000 39,000 23,000 15,000 Estimated % uncollectible Est. uncollectible accounts 1% 4% 5% 8% 20% Instructions A. Complete the aging schedule and calculate the total estimated uncollectible accounts based on the information provided. B. Prepare the bad debt adjusting entry using the information determined in part A. C. Ignore the calculation and journal entry created in Part B. Prepare the bad debt adjusting entry using the information determined in part A assuming the current balance in the Allowance for Doubtful Accounts is a $7,000 debit balance. D. In the following year, $5,000 of the outstanding accounts receivable is determined to be uncollectible. Record the write-off of the uncollectible accounts. E. The company collects $3,200 of the $5,000 of accounts that were previously determined to be uncollectible in part D. Record this transaction. F. Comment on how your answers in parts A through E would change if Ashmore used 4% of total accounts receivable rather than the accounts receivable aging. What are the advantages to the company of aging the accounts receivable rather than applying a percentage to total accounts receivable? G. How does the "Percentage of Sales Approach" compare to the "Percentage of Receivables Approach"?