The Ethan Company provides you with the following information on December 31, 2015 as it prepares to

Question:

The Ethan Company provides you with the following information on December 31, 2015 as it prepares to close its books for the year
Accounts Receivable Balance (before write offs)...................................... $7,891,500
Allowance for Doubtful Accounts Balance (before write offs): .........................212,000
Accounts deemed to be uncollectible: ......................................................230,000
Bad Debt rate based on % of AR balance:........................................................4%
Net Credit Sales 2015: ..................................................................$42,000,000
Bad Debt Rate Based on % of Credit Sales: ....................................................1%
Required:
Assuming Ethan Co uses the (AR balance) approach:
-Record the write off of uncollectible accounts.
-What is the new allowance for doubtful accounts balance after all adjustments?
-What is the bad debt expense, record the entry.
-What is the new Net Realizable Value of the receivable on the the exercise assuming Ethan Co uses the income statement approach.
-----> Morgan Company provides you with an aged balance as follows:

S Amount Est % Uncollectible Days Outstanding 0 -30 2,350,000 3% 31-60 1,110,000 7% 8% 61-90 750,000 91-120 300,000 10%

The current allowance for doubtful accounts balance before write-offs is $91,000.

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