3) Prepare Bank Reconciliation and Journal Entries

The Brown Company bank statement for September 30, 2010 showed a balance of $1,681.50. The company's cash account showed a $1,305.20 debit balance. The following information was also available:

A customer's cheque (from Jones Company) for $90 marked NSF was returned to Brown Company by the bank. The bank charged the company's account a $10 processing fee, which Brown will add to the amount owing from Jones.

The September 30 cash receipts, $1,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the bank statement.

A $15.10 debit memorandum for cheques printed by the bank was included with the cancelled cheques.

Outstanding cheques amounted to $1,141.40.

A customer's note for $920 was collected by the bank. A collection fee of $20 was deducted by the bank.

Included with the cancelled cheques was a cheque for $300, drawn on another company, The Browne Bros.

Brown Company

Bank Reconciliation

September 30, 2010

4) Doubtful Accounts and Bad Debt

Fife, Inc. has the following account balances at December 31, 2010: Accounts Receivable $445,600 and Allowance for Doubtful Accounts $4,600 (credit balance). Fife uses the aging of accounts receivable to estimate bad debts. The following aging schedule reflects the situation at year-end:

Account Age	Age Group Balance	Estimated Uncollectible Pct
Current	$196,000	2.0%
1 to 30 days past due	$164,000	5.0%
31 to 60 days past due	$56,000	15.0%
61 to 90 days past due	$16,400	35.0%
Over 90 days past due	$13,200	45.0%

1. Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, 2010, balance sheet.

2. Prepare the journal entry to record 2010 bad debts expense.

General Journal

Date	Accounts	Debit	Credit

General Journal

Date	Accounts	Debit	Credit

General Journal

Date	Accounts	Debit	Credit