The following selected information is from Imagine Corporation's partial aging schedule: The unadjusted balance in Allowance for
Question:
The following selected information is from Imagine Corporation's partial aging schedule:
The unadjusted balance in Allowance for Doubtful Accounts is a debit of $5,000.
Instructions
(a) Complete the aging schedule and calculate the total estimated uncollectible accounts from the above information.
(b) (1) Prepare the adjusting journal entry to record the bad debts using the information determined in part (a). (2) Would your journal entry be different if the unadjusted balance in Allowance for Doubtful Accounts were a credit of $5,000?
(c) In the following year, $3,000 of the outstanding receivables is determined to be uncollectible. Prepare the journal entry to write off the uncollectible amount.
(d) Imagine Corporation subsequently collects $1,500 of the $3,000 that was determined to be uncollectible in part (c).
Prepare the journal entry(ies) to record the collection.
(e) Comment on how your answers in parts (a) to (d) would change if Imagine used a percentage of total accounts receivable of 4%, rather than aging the accounts.
(f) What are the advantages to the company of aging the accounts receivable rather than applying a percentage to total accounts receivable?
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Step by Step Answer:
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118644942
6th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine