Question

FBusinessCourse Return to course Msubser prons Credit Losses Based on Accounts Recelvable Bily, Inc, analyzed its accounts receivable balances at December 31 and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: Probability of Age Group 0-30 days past due 31-60 days past due 61-120 days past due 121-180 days past due Over 180 days past due Balance Noncollection $320,000 60,000 3% 33.000 6% 18.000 10% 25% 14,000 $445,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $1,560 on December 31, before any adjustments. a. Prepare the adjusting entry for estimated credit losses on December 31. b. Prepare the journal entry to write off the Matthews Company's account on the following April 10, in the amount of s460. General Journal Credit Debit Date Description Dec.31 To record allowance for credit losses b. General journal Debit Credit Description Date 0 April 10 To write off Matthews Company's account

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Answers are highlighted in yellow: Solution: Credit Date Dec.31 Debit $ 10,720 a) $ 10,720 Journal Entires Account title and explaination Bad Debts Expense (refer below) Allowance for Doubtful Accounts (To record allowance for credit losses) Allowance for Doubtful Accounts Accounts Receivable - Matthews (To write off Matthews Company's account) b) Apr.10 $ 460 $ 460 Working: Age 0-30 31-60 61-120 121-180 over 180 days Balance 320000 60000 33000 18000 14000 445000 1% 3% 6% 10% 25% $ $ $ $ $ $ $ $ Adj. 3,200 1,800 1,980 1,800 3,500 12,280 1,560 10,720 Less: Beg. Allowance Adjustment require