Applying the allowance method (aging of accounts) to account for Un collectibles Summer and Sandcastles Resort had the following balances at December 31, 2012, before the year end adjustments:
|
Accounts receivable |
Allowance for uncollectible accounts |
|
78,000 |
1,900 |
The aging of accounts receivable yields the following data:
|
|
0–60 Days |
Age of Accounts receivable |
|
|
Over 60 Days |
Total Receivables |
||
|
Accounts receivable |
$75,000 |
$3,000 |
$78,000 |
|
Percent uncollectible |
*4% |
* 24% |
|
Requirements
1. Journalize Summer’s entry to adjust the allowance account to its correct balance at December 31, 2012.
2. Prepare a T account to compute the ending balance of Allowance for uncollectible accounts.