Accounting for uncollectible accounts using the allowance method and reporting receivables on the balance sheet [15-30 min]
At December 31, 2012, the Accounts receivable balance of GPS Technology is $190,000. The Allowance for doubtful accounts has an $8,600 credit balance. GpS Technology prepares the following aging schedule for its accounts receivable:
| Age of Accounts | |||
Accounts receivable | 1-30 Days | 31-60 Days | 61-90 Days | Over 90 Days |
$190,000 | $80,000 | $60,000 | $40,000 | $10,000 |
Estimated percent uncollectible | 0.4 % | 5.0 % | 6.0 % | 50.0 % |
Requirements
1. Journalize the year-end adjusting entry for doubtful accounts on the basis of the aging schedule. Show the T-account for the Allowance for uncollectible accounts at December 31, 2012.
2. Show how GPS Technology will report its net Accounts receivable on its December 31, 2012 balance sheet.
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