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1)At December 31, Gill Company reported accounts receivable of $236,000 and an allowance for uncollectible accounts of $1,300 (debit) before adjustment. An analysis of accounts

1)At December 31, Gill Company reported accounts receivable of $236,000 and an allowance for uncollectible accounts of $1,300 (debit) before adjustment. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. The amount of the adjusting entry for uncollectible accounts would be:

2)As the assistant controller for S Industries you are responsible for preparing the year-end adjusting entry to estimate uncollectible accounts receivable. The company uses the Allowance Method. For the current year, you have used the historical percentage of 20% of total year-end accounts receivable as a reasonable estimate of amounts that wont be collected. The controller is concerned about reporting a lower profit for the current year. The controller tells the assistant controller to lower the percentage to 10% this year which would lower the expense resulting in a higher net income. What should you do?

Multiple Choice

  • Keep the percentage 20% since this is the most accurate and reasonable estimate for the companys future uncollectible accounts receivable.

  • Changing the percentage does not violate an ethical consideration.

  • Lower the percentage to 10% to make sure the controller gives you a good review and raise this year.

  • Lower the percentage to 10% to avoid questions from the companys investors.

3)At the end of the year, a company has the following accounts receivable and estimates of uncollectible accounts:

  1. Accounts not yet due = $81,000; estimated uncollectible = 2%.
  2. Accounts 1 to 30 days past due = $29,000; estimated uncollectible = 15%.
  3. Accounts more than 30 days past due = $6,000; estimated uncollectible = 45%.

Required: Record the year-end adjusting entry for uncollectible accounts, assuming the current balance of the Allowance for Uncollectible Accounts is $840 (credit). (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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