The following aging of accounts receivable is for Harry Company at the end of its first year of business:

Harry Company has collected the following bad debt information from a consultant familiar with Harry€™s industry:
Percentage Ultimately
Age of Account Uncollectible
Less than 30 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
31€“60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
61€“90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Over 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
1. Compute the appropriate Allowance for Bad Debts as of December 31, 2012.
2. Make the journal entry required to record this allowance. Remember that, since this is Harry€™s first year of operations, the allowance account at the beginning of the year was $0.
3. What is Harry€™s net accounts receivable balance as of December 31,2012?

Transcribed Image Text:

Aging of Accounts Receivable December 31, 2012 Less Than 30 Days 31 to 60 61 to 90 Days Over 90 Overall Days 31,000 S 4,000 10,000 Days Ken Nelsorn Elaine Anderson Bryan Crist Renee Warner Nelson Hsia Stella Valerio Totals S10,000 8,000 S1,000 $1,000 5,000 4,000 2,0003,000 40,000 12,000 60,000 16,000 25,000 $163,000 3,000 50,000 10,000 20,000 6,000 5,000 S122,000 24,000 S8,000 $9,000