Accounting for uncollectible accounts using the allowance method, and reporting receivables on the balance sheet [25-35 min]
At September 30, 2012, the accounts of Park Terrace Medical Center (PTMC) include the following:
Accounts receivable............................ | $ 141,000 |
Allowance for uncollectible accounts (credit balance) . . . | 3,400 |
During the last quarter of 2012, PTMC completed the following selected transactions:
Dec 28 | Wrote off accounts receivable as uncollectible: Red Co., $1,600; Jacob Weiss, $1,300; and Star, Inc., $300. | ||||
Dec 31 | Recorded uncollectible account expense based on the aging of accounts receivable, as follows: | ||||
Age of Accounts | |||||
Accounts receivable | 1-30 Days | 31-60 Days | 61-90 Days | Over 90 Days | |
$161,000 ........... | $99,000 | $ 42,000 | $ 15,000 | $ 5,000 | |
Estimated percent uncollectible....... | 0.2% | 2% | 20% | 25% | |
Requirements
1. Journalize the transactions.
2. Open the Allowance for uncollectible accounts T-account, and post entries affecting that account. Keep a running balance.
3. Show how Park Terrace Medical Center should report net Accounts receivable on its December 31, 2012 balance sheet. Use the three line reporting format.
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