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, 2018, it had balances in accounts receivable and allowance for doubtful accounts of $478,000 and $7,900 (credit), respectively. During 2018, 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, 2018, prior to the adjustment. $ 2. Calculate Ingrid's balance in allowance for doubtful accounts on December 31, 2018, prior to the adjustment. $ 3. Prepare the necessary adjusting entry for 2018. Account and Explanation Debit Credit Record adjusting entry for allowance for doubtful accounts estimate
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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, 2018, it had balances in accounts receivable and allowance for doubtful accounts of $478,000 and $7,900 (credit), respectively. During 2018, 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, 2018, prior to the adjustment.
$
2. Calculate Ingrid's balance in allowance for doubtful accounts on December 31, 2018, prior to the adjustment.
$
3. Prepare the necessary
| Account and Explanation | Debit | Credit | |
| Record adjusting entry for allowance for doubtful accounts estimate |
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