Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year- end, an aging of the accounts receivable produced the following five groupings: a. Not yet due $250,000 b. 1-30 days past due 105,000 c. 31-60 days past due 40,000 d. 61-90 days past due 7,500 e. Over 90 days past due 15,000 Total $417,500 On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group a, 1 percent; Group b, 3 percent; Group c, 10 percent; Group d, 20 percent; and Group e, 50 percent. The Allowance for Doubtful Accounts before adjustment at December 31 showed a credit balance of $5,900. Assume that on January 10 of the following year, Putnam & Putnam learned that an account receivable that had originated on September 1 in the amount of $4,300 was worthless because of the bankruptcy of the client, Safeland Co. Prepare the journal entry required on January 10 to write off this account.
Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year- end, an aging of the accounts receivable produced the following five groupings: a. Not yet due $250,000 b. 1-30 days past due 105,000 c. 31-60 days past due 40,000 d. 61-90 days past due 7,500 e. Over 90 days past due 15,000 Total $417,500 On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group a, 1 percent; Group b, 3 percent; Group c, 10 percent; Group d, 20 percent; and Group e, 50 percent. The Allowance for Doubtful Accounts before adjustment at December 31 showed a credit balance of $5,900. Assume that on January 10 of the following year, Putnam & Putnam learned that an account receivable that had originated on September 1 in the amount of $4,300 was worthless because of the bankruptcy of the client, Safeland Co. Prepare the journal entry required on January 10 to write off this account.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Prepare
Transcribed Image Text:Putnam & Putnam, a legal firm, uses the balance sheet
approach to estimate uncollectible accounts expense. At year-
end, an aging of the accounts receivable produced the
following five groupings:
a. Not yet due
$250,000
b. 1-30 days past due
105,000
c. 31-60 days past due
40,000
d. 61-90 days past due
7,500
e. Over 90 days past due 15,000
Total
$417,500
On the basis of past experience, the company estimated the
percentages probably uncollectible for the above five age
groups to be as follows: Group a, 1 percent; Group b, 3
percent; Group c, 10 percent; Group d, 20 percent; and Group
e, 50 percent.
The Allowance for Doubtful Accounts before adjustment at
December 31 showed a credit balance of $5,900.
Assume that on January 10 of the following year, Putnam &
Putnam learned that an account receivable that had originated
on September 1 in the amount of $4,300 was worthless
because of the bankruptcy of the client, Safeland Co.
Prepare the journal entry required on January 10 to write off
this account.
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