Aging Method}

On January 1, 2018, Smith Inc. has the following balances for accounts receivable and allowance for doubtful accounts:

During 2018 , Smith had \(\$ 2,865,000\) of credit sales, collected \(\$ 2,905,000\) of accounts receivable, and wrote off \(\$ 3,850\) of accounts receivable as uncollectible. At year-end, Smith performs an aging of its accounts receivable balance and estimates that \(\$ 3,800\) will be uncollectible.
\section*{Required:}
1. Calculate Smith's preadjustment balance in accounts receivable on December 31, 2018.
2. Calculate Smith's preadjustment balance in allowance for doubtful accounts on December 31,2018 .
3. Prepare the necessary adjusting entry for 2018 .
\section*{Cornerstone Exercise

Transcribed Image Text:

Accounts Receivable $382,000 Allowance for Doubtful Accounts (a credit balance) 4,200