Question No 4: Moonglow, a Broadway Publicity firm, uses the balance sheet approach toestimate uncollectible accounts expense. At year-end an aging of the accounts receivableproduced the following classification:Not yet due.1-30 days past due.31-60 days past due.61-90 days past due.Over 90 days past due$400,000150,00060,00020,00050,000S680.000Total.On the basis of past experience, the company estimated the percentages probably uncollectiblefor the above five age groups to be as follows: Group 1, 1%; Group 2, 4%; Group 3, 10%; Group4, 25%; and Group 5, 40%The Allowance for Doubtful Accounts before adjustments at December 31 showed a creditbalance of $6,600.Instructionsa. Compute the estimated amount of uncollectible accounts based on the aboveclassification by age groups.b. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to theproper amount. Show T- account calculation.c. Assume that on January 15 of the following year, Moonglow learned that an accountreceivable that had originated on September 1 in the amount of $2,400 was worthlessbecause of the bankruptcy of the client, May Flowers. Prepare the journal entryrequired on January 15 to write off this account.

Solution a: Computation of Allowance for Uncollectible Accounts Ageing Accounts Receivables %…

Answered: 50,000 $680.000 .... .... d the…

Business

Accounting

50,000 $680.000 .... .... d the percentages probably uncollect

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter14: Accounting For Uncollectible Accounts Receivable

Section14.1: Uncollectible Accounts Receivable

Problem 1OYO

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