1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? 2. Make the entry required by the aging schedule; show your calculation. 3. Show how Sunset Hills Clinic will report Accounts Receivable on its December 31 balance sheet. Over 90 days Total 0-30 days $110,000 0.5% 31-60 days $60,000 1% 61-90 days $50,000 6% $15,000 $235,000 40% Receivables Estimated uncollectible Allowance balance Compared to the current balance of $6,500, is it sufficient? ACCOUNTS DEBIT CREDIT DATE Calculation: BALANCE SHEET
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
![E4-26 At December 31, 2020, before any year-end adjustments, the Accounts
Receivable balance of Sunset Hills Clinic is $235,000. Allowance for Uncollectible
Accounts has a $6,500 credit balance. Sunset Hills prepares the following aging schedule
for accounts receivable:
Age of Accounts
Total Balance
0-30 Days
31-60 Days
61-90 Days
Over 90 Days
$110,000
$60,000
$50,000
$15,000
$235,000
0.5%
1.0%
6.0%
40%
Estimated uncollectible
Requirements:
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![1. Based on the aging-of-receivables method, is the unadjusted balance of the
allowance account adequate?
2. Make the entry required by the aging schedule; show your calculation.
3. Show how Sunset Hills Clinic will report Accounts Receivable on its December
31 balance sheet.
Over 90 days
$15,000 $235,000
40%
Total
Receivables
Estimated
uncollectible
0-30 days
$110,000
0.5%
31-60 days
$60,000
1%
61-90 days
$50,000
6%
Allowance
balance
Compared to the current balance of $6,500, is it sufficient?
ACCOUNTS
DEBIT
CREDIT
DATE
Calculation:
BALANCE SHEET](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fae3f4f00-ad4f-41f8-9ef9-b8d4bde0bbfd%2F2bbdadbf-4f6f-4f7f-978e-e697828c1fe7%2Fa3e95l_processed.jpeg&w=3840&q=75)
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