At December 31, 20X7, before any year end adjustments, the accounts receivable balance of Sunset Hills Clinic is $235,000. The allowance for doubtful accounts has a $7,400 credit balance. Sunset Hills prepares the following aging schedule for accounts receivable:
|
Age of Accounts |
||||
|
Total Balance |
1–30 Days |
31–60 Days |
61–90 days |
Over 90 Days |
|
$235,000 |
$110,000 |
$60,000 |
$50,000 |
$15,000 |
|
Estimated uncollectible |
0.5% |
1.0% |
6.0% |
40% |
Required
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 Sunset Hills Clinic will report Accounts Receivable on its December 31 balance sheet. Include the 2 accounts that come before receivables on the balance sheet, using assumed amounts.