Age of Accounts Over 90 Days Total Balance 233,000 Estimated uncollectible 0-30 Days $117,000 31-60 Days $55,000 5.0 % 61-90 Days $49,000 7.0 % $12,000 0.1 % 44 % At December 31, 2020, before any year-end adjustments, the Accounts Receivable balance of Casserole Clinic is $233,000. Allowance for Uncollectible Accounts has a credit balance of $7,525. Casserole prepares the following aging schedule for accounts receivable (Click the icon to view the aging schedule.) Requirements 1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? Is it too high or too low? How does management determine what percentages to use for estimating uncollectible accounts? 2. Make the entry required by the aging schedule. Prepare a T-account for the allowance. 3. Show how Casserole will report Accounts Receivable on its December 31 balance sheet. Include the two accounts that come before receivables on the balance sheet, using assumed amounts. Requirement 1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? Is it too high or too low? How does management determine what percentages to use for estimating uncollectible accounts? Before we can assess whether the current balance of the allowance account is adequate, we first have to calculate a revised allowance for uncollectible accounts amount. (Round your answers to the nearest whole dollar.) Allowance for uncollectible accounts: Credit balance needed 0-30 31-60 61-90 Over 90 Subtotal Less: Unadjusted balance Adjusting entry amount At December 31, 2020, before any year-end adjustments, the Accounts Receivable balance of Casserole Clinic is $233,000. Allowance for Uncollectible Accounts has a credit balance of $7,525. Casserole prepares the following aging schedule for accounts receivable E (Click the icon to view the aging schedule.) Requirements 1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? Is it too high or too low? How does management determine what percentages to use for estimating uncollectible accounts? 2. Make the entry required by the aging schedule. Prepare a T-account for the allowance. 3. Show how Casserole will report Accounts Receivable on its December 31 balance sheet. Include the two accounts that come before receivables on the balance sheet, using assumed amounts. Complete the sentences below. (Round your answers to the nearest whole dollar.) The credit balance at December 31 in Allowance for Uncollectible Accounts should be $(. The current balance is $. Thus, the current balance of the allowance account is Management uses their and with collections to arrive at the percentages to use for estimating uncollectible accounts. Requirement 2. Make the entry required by the aging schedule. Prepare a T-account for the allowance. (Record debits first, then credits. Explanations are not required.) First, prepare the journal entry using the adjusting entry amount we calculated in the first step. Journal Entry Date Accounts Debit Credit Dec. 31 At December 31, 2020, before any year-end adjustments, the Accounts Receivable balance of Casserole Clinic is $233,000. Allowance for Uncollectible Accounts has a credit balance of $7,525. Casserole prepares the following aging schedule for accounts receivable E (Click the icon to view the aging schedule.) Requirements 1. Based on the aging-of-receivables method, is the unadjusted balance of the allowance account adequate? Is it too high or too low? How does management determine what percentages to use for estimating uncollectible accounts? 2. Make the entry required by the aging schedule. Prepare a T-account for the allowance. 3. Show how Casserole will report Accounts Receivable on its December 31 balance sheet. Include the two accounts that come before receivables on the balance sheet, using assumed amounts. Requirement 3. Show how Casserole will report Accounts Receivable on its December 31 balance sheet. Include the two accounts that come before receivables on the balance sheet, using assumed amounts. There are two generally accepted methods to present receivables on the balance sheet. The first method reports the allowance for uncollectible accounts amount in the line item description. (Enter the allowance for the uncollectible accounts amount. Then calculate the net accounts receivable amount.) Balance Sheet (Partial): Current assets: Cash $XX.XXX Short-Term Investments XX.XXX Accounts Receivable, net of Allowance for Uncollectible Accounts of $ The second method used to present receivables on the balance sheet shows the Allowance for Uncollectible Accounts on a line of its own. Balance Sheet (Partial): Accounts Receivable Less: Allowance for Uncollectible Accounts Accounts Receivable, net
