Accounts receivable for Smith Ltd. were reported on the statement of financial position prepared at the end of 20X8, as follows:

Additional information:
The company sells goods on account. At the end of the year, accounts receivable are aged and the following percentages are applied in arriving at an estimate of the charge for doubtful accounts.

Estimated loss

Current accounts .............................................................    0%

Accounts 1–2 months overdue .....................................    7%

Accounts 3–6 months overdue .....................................    20%

Accounts 7–12 months overdue .....................................  50%

Accounts more than 1 year overdue ..............................  95%

At the end of the year, most of the accounts receivable are current. However, the aging schedule (after write offs and recoveries) shows the following:

Accounts 1–2 months overdue .....................................    $7,500
Accounts 3–6 months overdue .....................................      6,100
Accounts 7–12 months overdue ...................................      2,500
Accounts more than 1 year overdue..............................        880

Required:

1. Give the entries required to record the transactions listed above and also to adjust the accounts.

2. Calculate the balance for accounts receivable and the related allowances as at 31 December 20X9, and show these accounts as they will appear on the statement of financial position.

Transcribed Image Text:

Accounts receivable $122,900 Less: Allowance for doubtful accounts 3.530 $119,370 In 20X9, the following transactions took place: Accounts written off $2,150 Accounts previously written off but recovered 650