At December 31, Mueller Company had a balance of ($ 409,000) in its Accounts Receivable account and
Question:
At December 31, Mueller Company had a balance of \(\$ 409,000\) in its Accounts Receivable account and a credit balance of \(\$ 4,200\) in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of \(\$ 414,000\) in debit balances and \(\$ 5,000\) in credit balances. The company aged its accounts as follows:
In the past, the company has experienced credit losses as follows: one percent of current balances, five percent of balances 0-60 days past due, 18 percent of balances \(61-180\) days past due, and 30 percent of balances over six months past due. The company bases its allowance for doubtful accounts on an aging analysis of accounts receivable.
Required
a. Prepare the adjusting entry to record the allowance for doubtful accounts for the year.
b. Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.
Step by Step Answer:
