Problem

Accounting for uncollectible accounts using the allowance method and reporting receivables...

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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