At the end of Year 5, your consulting firm has been hired by a local service firm to help forecast future uncollectible accounts. For each of the prior five years, you ask the service firm to provide data on the age categories of year-end accounts receivable and the percentage of those accounts that eventually proved uncollectible. With these historical percentages, you estimate a trend line (dashed line) to predict the percentage of uncollectible accounts for Year 6, the upcoming year. Graphs were provided to management from your analysis of each of the three age categories, as well as balances of accounts receivable by age category at the end of Year 5 as follows: 8% 6% 4% 2% 0% 4% Not Yet Past Due --5% Year 1 2 3% 3 4 5% 5 Percentage of Uncollectible Accounts: 1-30 Days Past Due 6% 6 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Click here to open the graphs in a new tab. 18% 16% 14% 12% 10% 16% 14% Year 1 2 $128,000 17% Not Yet Past Due 3 14% Accounts Receivable by Age: End of Year 5 4 5 6 15% $84,000 1-30 Days Past Due 46% 44% 42% 40% 38% $35,000 Over 30 Days Past Due 42% Year 1 Over 30 Days Past Due 40% 2 41% 3 4 42% 43% 5 6 Required: 1. Which age categories predicts the lowest percentage of uncollectible accounts for Year 6? 2. Which age categories predicts the highest percentage of uncollectible accounts for Year 6? 3. What is the dollar amount of accounts receivable that are 1-30 days past due at the end of year 5 (bottom graph)? 4. Calculate the total amount of estimated uncollectible accounts for Year 6 (Hint: Use all three age categories)? 5. Assume the balance of Allowance for Uncollectible Accounts is $4,850 (credit) at the end of Year 5 (before any adjustment). Prepare the adjusting entry at the end of Year 5. 6. Determine the amount of net accounts receivable the company would report at the end of Year 5.