At December 31, 2013, Sunil Company had a balance of $375,000 in its accounts receivable and an unused balance of $4,200 in its allowance for uncollectible accounts. The company then aged its accounts as follows:

Current	$304,000
060 days past due	44,000
61180 days past due	18,000
Over 180 days past due	9,000
Total accounts receivable	$375,000

The company has experienced losses as follows: 1% of current balances, 5% of balances 060 days past due, 15% of balances 61180 days past due, and 40% of balances over 180 days past due. The company continues to base its provision for credit losses on this aging analysis and percentages.

a. What amount of bad debts expense does Sunil report on its 2013 income statement?

$

Answer

26,000

b. Show how accounts receivable and the allowance for uncollectible accounts are reported in its December 31, 2013, balance sheet.

Current Assets:
Accounts receivable	$ Answer 242,000
Less: Allowance for uncollectible accounts	Answer 42,000
Accounts receivable, net	$ Answer 284,000

c. Set up T-accounts for both Bad Debts Expense and for the Allowance for Uncollectible Accounts. Enter any unadjusted balances along with the dollar effects of the information described (including your results from parts a and b).

Bad Debts Expense (E)
Balance	Answer 242,000	Answer (22,000)
a.	Answer 1,340,000	Answer (1,280,000)
Balance	Answer 1,098,000	Answer 280,000

Allowance for Uncollectible Accts. (XA)
Balance	Answer 24,000	Answer 26,000
a.	Answer 22,000	Answer 280,000
Balance	Answer 46,000	Answer 0