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Problem 3 (20 Points) ULTRA LEATHER PRODUCTS Calculation of Estimated Uncollectible Accounts Expense Category Amount Estimated Rate of Loss Estimated Uncollectible MERITOR LEATHER PRODUCTS GENERAL JOURNAL Date Description Adjusting Entries 2014 Dec. 31 2015 Jan. 20 2015 Nov. 26 Post Ref Debit Credit Given Data Problem 3 ULTRA LEATHER PRODUCTS Accounts Receivable as of December 31, 2014 Allowance for Doubtful Accounts as of December 31, 2014 $400,000.00 $700.00 2014 Credit Sales Breakdown Category Wholesale Retail Amount $3,000,000 900,000 Estimated Rate of Loss 1.00% 2.00% Ultra Leather Products sells leather clothing at both wholesale and retail. The company has found that there is a higher rate of uncollectible accounts from retail credit sales than from wholesale credit sales. Ultra computes its estimated loss from uncollectible accounts at the end of each year. The amount is based on the rates of loss that the firm has developed from experience for each division. A separate computation is made for each of the two types of sales. The firm uses the percentage of net credit sales method. As of December 31, 2014, Accounts Receivable has a balance of $400,000, and Allowance for Doubtful Accounts has a debit balance of $700.00. The table above provides a breakdown of the credit sales for the year 2014 and the estimated rates of loss. INSTRUCTIONS A.) Compute the estimated amount of uncollectible accounts expense for each of the two categories of net credit sales for the year. B.) Prepare an adjusting entry in general journal form to provide for the estimated uncollectible accounts on December 31, 2014. Use Uncollectible Accounts Expense. C.) On January 20, 2015, the account receivable of Delphi Clothiers, amounting to $1,200 is determined to be uncollectible and is to be written off. Record this transaction in the general journal. D.) On November 26, 2015, the attorneys for Ultra turned over a check for $1,200 that they obtained from Delphi Clothiers in settlement of its account, which had been written off on January 20. The money has already been recorded in the cash receipts journal. Give the general journal entry to reverse the original write-off