Question
2. Diebold Corp. made $1,500,000 in sales during 2017. Twenty percent of these were cash sales. During the year, $72,000 of accounts receivable were written
2. Diebold Corp. made $1,500,000 in sales during 2017. Twenty percent of these were cash sales. During the year, $72,000 of accounts receivable were written off as being uncollectible. In addition, $40,000 of the accounts that were written off in 2016, were unexpectedly collected in 2017. At its' year-end December 31, 2017, Diebold had a balance of $525,000 in accounts receivable. The balance in the Allowance for Doubtful Accounts general ledger account was $112,500 credit at December 31, 2016.
Age (days)
Accounts
Receivable
1-30
$ 210,000
31-60
105,000
61-90
52,500
91-120
126,000
Over 120
31,500
Total
$525,000
Required:
1)Prepare journal entries to record the following 2017 transactions:
a.The write-off of $72,000
b.The recovery of $40,000
2)Recalculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2017.
3)The estimated uncollectible accounts at December 31, 2017 are calculated as follows:
Age (days)
Estimated
Loss
percentage
1-30
2%
31-60
4%
61-90
6%
91-120
10%
Over 120
40%
Required: Prepare the adjusting entry required at December 31, 2017.
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