On December 31, 2015, the Accounts Receivable balance of Alterations Express is $300,000. The Allowance for Doubtful

Question:

On December 31, 2015, the Accounts Receivable balance of Alterations Express is $300,000. The Allowance for Doubtful Accounts has a $3,900 credit balance. Alterations prepares the following aging schedule for its accounts receivable:

Age of Accounts Over 90 Days $10,000 50% 1-30 Days 31-60 Days $80,000 1.0% 61-90 Days $70,000 6.0% Accounts Receivable .

Requirements
1. Journalize the year-end adjusting entry for bad debts 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 December 31, 2015.
2. Assume that instead of a $3,900 credit balance, there is a $1,300 debit balance in the allowance account prior to adjustment. Journalize the year-end adjusting entry for bad debts 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 December 31, 2015.

Aging Schedule
Aging schedule is an accounting table that shows a company’s account receivables. It is an summarized presentation of accounts receivable into a separate time brackets that the rank received based upon the days due or the days past due. Generally...