Question

Multiple Choice will be done online in D2L Quiz - don't forgel! Short answers and problems. In the space provided, answer the following questions. Be sure to show any comptations. If a statement is to be prepared, it should be prepared in good form. Point values are shown for each question 1. (11 points total) Lattice Company sells product to customers on open account. They use the allowance method and determine the balance required in the allowance for doubtful accounts by reviewing an aging of their accounts receivable. Following is an aging as of December 31, 2019. Complete each of the steps below. Point values are shown for each part. a. (5 points) Using this aging, compute the estimated amount of uncollectible accounts as of December 31, 2019. ***** Company Accounts Receivable Aging Summary As of Dec 31, 2019 Estimated % Uncollectible 1.5% 5.0% 7.0% Age of Accounts (days past due) 0 - 30 days 31 -60 days 61 - 90 days 91 - 180 days over 180 days Total accounts Account Totals 350,000.00 70,000.00 20,000.00 10,000.00 50,000.00 500,000.00 15.0% 50.0% The estimated total of the uncollectible accounts equals: b. (2 points) Write out the adjusting entry as of December 31, 2019. Assume that the Allo Doubtful Accounts has a credit balance of $4,000 at December 31, 2019 before adjustm

Answer 1

Part a	Estimated amount of uncollectible Amount:
	Age of Accounts (Days past due)	Account Total	Estimated Uncollectible (%)	Estimated Uncollectible
	0-30	3,50,000	1.50%	5,250
	31-60	70,000	5.00%	3,500
	61-90	20,000	7.00%	1,400
	91-180	10,000	15.00%	1,500
	Over 180	50,000	50.00%	25,000
	Total	5,00,000		36,650
	The estimated total of Uncollectible accounts equal:		36,650
Part b	Allowance for Doubtful Accounts		4,000
	Required Allowance for Doubtful Accounts		36,650
	Allowance for Doubtful Accounts to be created		32,650
	Date	Particulars	Debit	Credit
	Dec 31, 2019	Profit & Loss A/c	32,650
		To Allowance for Doubtful Accounts		32,650
		(Being Allowance on debtors created)
Part c	Allowance for Doubtful Accounts		-800
	Required Allowance for Doubtful Accounts		36,650
	Allowance for Doubtful Accounts to be created		37,450
	Date	Particulars	Debit	Credit
	Dec 31, 2019	Profit & Loss A/c	37,450
		To Allowance for Doubtful Accounts		37,450
		(Being Allowance on debtors created)
Part d	Date	Particulars	Debit	Credit
	June 30, 2020	Allowance for Doubtful Accounts	10,000
		To Thorsan		10,000
		(Being Thorsan a/c written off due to bankruptcy application filed)
	Note: Being there is allowance already created hence bad debts adjusted from allowance for doubtful debts instead of debiting from profit & Loss A/c