Bad-Debt Reporting Presented below is information related to the Accounts Receivable accounts of Gulistan Inc. during the current year 2010.

1. An aging schedule of the accounts receivable as of December 31, 2010, is as follows.

2. The Accounts Receivable control account has a debit balance of $372,400 on December 31, 2010.

3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,240 on November 3, 2010, and a debit to Allowance for Doubtful Accounts because of a bankruptcy.

4. The Allowance for Doubtful Accounts is as follows for 2010.

Allowance for Doubtful Accounts

Nov. 3 Uncollectible accounts ? ? ? ? ? ? ? ? ? ? ? ?Jan. 1 Beginning balance ? ? ? ?8,750

? ? ? Written off ? ? ? ? ? ? ? ? ? ?3,240 ? ? ? ? ? ? ? ? ? ? ?Dec. 31 5% of $372,400 ? ? ? 18,620

5. A credit balance exists in the Accounts Receivable (60?90 days) of $4,840, which represents an advance on a sales contract. Assuming that the books have not been closed for 2010, make the necessary correcting entries

Net Debit Balance % to Be Applied after Correction Is Made Age Under 60 days 60-90 days 91-120 days Over 120 days $172,342 136,490 39,924" 23,644 1% 3% 6% $3,700 definitely uncollectible; estimated remainder $372,400 uncollectible is 25%