Chapter 7, Problem 35BE

Aging of accounts receivable allowance method (Learning Objective 4) 15–20 min.

On March 31, 2018, the Accounts Receivable balance of Dunham Manufacturing, Inc., is $173,000. The Allowance for Uncollectible Accounts has a $1,650 credit balance. Dunham Manufacturing, Inc., prepares the following aging schedule for its accounts receivable:

	Age of Accounts
	1–30 Days	31–60 Days	61–90 Days	Over 90 Days
Accounts Receivable...............................	$100,000	$30,000	$25,000	$18,000
Estimated Percentage Uncollectible...............................	0.2%	5.0%	8.0%	30%

Requirements

1. 1. Journalize the year-end adjusting entry for uncollectible accounts on the basis of the aging schedule. Calculate the resulting ending balance of the Allowance account based on the account aging. Show the T-account for the Allowance on March 31, 2018.
2. 2. Assume that instead of a $1,650 credit balance, the Allowance account has a $400 debit balance before adjustment. Journalize the year-end adjusting entry for uncollectible accounts on the basis of the aging schedule. Calculate the resulting ending balance of the Allowance account based on the account aging. Show the T-account for the Allowance on March 31,2018.