Chapter 5, Problem 5.20AE

LO 5

(Learning Objective 5: Apply GAAP to uncollectible receivables) At December 31, 2018, before any year-end adjustments, the Accounts Receivable balance of Alpha Company, Inc., is $390,000. The Allowance for Uncollectible Accounts has a $15,500 credit balance. Alpha prepares the following aging schedule for Accounts Receivable:

Requirements

  1.    Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?

  2.    Make the entry required by the aging schedule. Prepare a T-account for the allowance.

  3.    Show how alpha will report Accounts Receivable on its December 31 balance sheet.