Using the data in Exercise 6-7, assume that the allowance for doubtful accounts for Sun Valley Rides had a negative balance of $(6,650) as of December 31, 20Y3. Illustrate the effects of the adjustment for uncollectible  accounts as of December 31, 20Y3, on the accounts and financial statements.

Data from Exercise 6-7

Sun Valley Rides is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 20Y3, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

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Age Interval Balance Percent Uncollectible $ 925,000 Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due 1% 375,000 2 50,000 6 30,000 22,500 14 60 12,500 $1,415,000 90