2. At December 31, 2017, Engel Company had a balance of $770,000 in its Accounts Receivable account and an unused balance of $7,000 in its Allowance for Doubtful Accounts. The company then analyzed and aged its accounts receivable as follows:

Current $468,000

1-60 days past due 244,000

61-180 days past due 38,000

Over 180 days past due 20,000

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Total accounts receivable $770,000

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In the past, the company experienced losses as follows: 1% of current balances, 5% of balances 1-60 days past due, 15% of balances 61-180 days past due, and 40% of balances over 180 days past due. The company bases its provision for credit losses on the aging analysis.

Required:

1. What amount of uncollectible accounts (bad debts) expense will Engel report in its 2017 income statement? Show this transaction as a journal entry.

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear in its December 31, 2017, balance sheet.

3. Assume that Engels allowance for doubtful accounts has maintained an historical average of 2% of gross accounts receivable. How do you interpret the level of the current allowance percentage?

4. Report the each of the following transactions (unrelated to the above) as journal entries and then post the amounts to the appropriate T-accounts

1. Bad debts expense estimate at $23,580 assuming that there is an unused balance of $7,000 in the Allowance for Doubtful Accounts.
2. Write off $5,000 in customer accounts.