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Aging Method Ingrid Inc. has strict credit policies and only extends credit to customers with outstanding credit history. The company examined its accounts and determined that at January 1, 2019, it had balances in Accounts Receivable and Allowance for Doubtful Accounts of $478,000 and $7,900 (credit), respectively. During 2019, Ingrid extended credit for $3,075,000 of sales, collected $2,715,000 of accounts receivable, and had customer defaults of $4,280. Ingrid performed an aging analysis on its receivables at year end and determined that $6,800 of its receivables will be uncollectible. Required: 1. Calculate Ingrid’s balance in accounts receivable on December 31, 2019, prior to the adjustment. 2. Calculate Ingrid’s balance in allowance for doubtful accounts on December 31, 2019, prior to the adjustment. 3. Prepare the necessary adjusting entry for 2019.

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 5, Problem 46BE
Textbook Problem

Aging Method

Ingrid Inc. has strict credit policies and only extends credit to customers with outstanding credit history. The company examined its accounts and determined that at January 1, 2019, it had balances in Accounts Receivable and Allowance for Doubtful Accounts of $478,000 and $7,900 (credit), respectively. During 2019, Ingrid extended credit for $3,075,000 of sales, collected $2,715,000 of accounts receivable, and had customer defaults of $4,280. Ingrid performed an aging analysis on its receivables at year end and determined that $6,800 of its receivables will be uncollectible.

Required:

1. Calculate Ingrid’s balance in accounts receivable on December 31, 2019, prior to the adjustment.

2. Calculate Ingrid’s balance in allowance for doubtful accounts on December 31, 2019, prior to the adjustment.

3. Prepare the necessary adjusting entry for 2019.

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Chapter 5 Solutions

Cornerstones of Financial Accounting
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