Wall Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year end.
Number of Days Outstanding
Total 0-30 31-60 61-90 91-120 Over 120
Accounts receivable $200,000 $77,000 $46,000 $39,000 $23,000 $15,000
% uncollectible 2% 5% 8% 10% 15%
1 Calculate the total estimated bad debts based on the above information.
2 Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in the question above. Assume the current balance in Allowance for Doubtful Accounts is a $8,000 debit.
3 Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
4 The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in the question above. Prepare the journal entry(ies) necessary to restore the account and record the cash collection