Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 40

Putnam Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible accounts expense.t year-end, an aging of the accounts receivable produced the following five groupings:

On the basis of past experience, the company estimated the percentages probably uncollectible for the above 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 $5,900.
Instructions
a.ompute the estimated amount of uncollectible accounts based on the above classification by age groups.
b.repare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount.
c.ssume 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 $4,300 was worthless because of the bankruptcy of the client, Safeland Co.repare the journal entry required on January 10 to write off this account.
d.he firm is considering the adoption of a policy whereby clients whose outstanding accounts become more than 60 days past due will be required to sign an interest-bearing note for the full amount of their outstanding balance.hat advantages would such a policy offer