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b. Estimating Uncollectible Accounts -- Aging of Accounts Receivable Approach. This journal entry is independent of journal entry in part a. Assume the ALLOWANCE FOR
b. Estimating Uncollectible Accounts -- "Aging" of Accounts Receivable Approach. This journal entry is independent of journal entry in part a. Assume the ALLOWANCE FOR DOUBTFUL ACCOUNTS has a beginning balance of $15,000 as a result of last year's adjustment. Assume the following analysis or aging of ACCOUNTS RECEIVABLE is available at 12/31/02: Estimated Uncollectible Accounts Receivable Percent Total Age Interval Balance Uncollectible Uncollectible $ Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due Total $320,000 40,000 20,000 12,000 10,000 4,000 $406,000 1% 5% 30% 60% 70% 90% ALLOWANCE FOR DOUBTFUL ACCOUNTS 1/1/7 $15,000 UNCOLLECTIBLE ACCOUNT EXPENSE 1/1/7 $0 12/31/7 12/31/17 12/31/7 $ 12/31/7 $ At 12/31 Year 7, based on the "aging" of ACCOUNTS RECEIVABLE, ECU Corporation adjusts the balance of the contra-ASSET account, ALLOWANCE FOR DOUBTFUL ACCOUNTS / and recognize the amount of UNCOLLECTIBLE ACCOUNT EXPENSE. Phrase Account Category Affect Dr. or Cr. 1st: + Dr Cr AL SE R E contra AL SE RE contra 2nd: Dr Cr Date Accounts Debit Credit
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