Using the data in Exercise 6-7, assume that the allowance for doubtful accounts for Cycle Parts International had a negative balance of $11,300 as of

Using the data in Exercise 6-7, assume that the allowance for doubtful accounts for Cycle Parts International had a negative balance of −$11,300 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.

In Exercise 6-7, Cycle Parts International 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 asfollows:

Age Interval 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 Balance Percent Uncollectible $1,350,000 600,000 90,000 40,000 20,000 10,000 $2,110,000 2% 15 50 80