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. $ 300,000 Not yet due b. a. 1-30 days past due 31-60 days past due d. 126,000 48,000 9,000 18,000 c. 61-90 days past due Over 90 days past due e. Total $501,000 On the basis of past experience, the company estimated the percentages probably uncollectible for the 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 $7,080. Required: a. Compute the estimated amount of uncollectible accounts based on the above classification by age groups. b. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. c. 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 $5,160 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. $ 300,000 Not yet due b. a. 1-30 days past due 31-60 days past due d. 126,000 48,000 9,000 18,000 c. 61-90 days past due Over 90 days past due e. Total $501,000 On the basis of past experience, the company estimated the percentages probably uncollectible for the 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 $7,080. Required: a. Compute the estimated amount of uncollectible accounts based on the above classification by age groups. b. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. c. 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 $5,160 was worthless because of the bankruptcy of the client, Safeland Co. Prepare the journal entry required on January 10 to write off this account.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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