Complete Auto Supply distributes new auto parts to local dealers throughout the Southeast. Complete Autos credit terms are n/30. As of the end of business on March 31^st, 2016 Complete had the following Accounts Receivable outstanding:

Customer Name Due Date (2016) Amount

Little Rock Auto March 10^th $5,000

Fayetteville Auto Supply January 18^th 4,000

Texarkana Auto December 22, 2015 8,000

Memphis Auto Repair February 23^rd 7,500

Jackson Repair & Tow April 15^th 3,000

a) Determine the number of days past due for each of the preceding accounts as of March 31^st. Then, complete an aging of receivables schedule.

b) Based upon past history of uncollectible accounts, Complete Auto expects to NOT collect 0.75% of not past due accounts, 8% of accounts that are 1-30 days past due, 16% of accounts that are 31-60 days past due, 45% of accounts that are 61-90 days past due, and 75% of accounts that are 91 days past due. Estimate the allowance for doubtful accounts using the aging of receivables schedule you created for part A.

c) Assume, Complete Auto has a beginning credit balance of $2,500 in the Allowance for Doubtful Account before adjustment on March 31^st. Journalize the adjusting entry for uncollectible accounts as of March 31^st.

The following transactions were completed by The Peeking Company during the current fiscal year ended December 31:

Mar. 30 Received 40% of the $20,000 balance owed by Geeking, Inc., and wrote off the remainder as uncollectible.

June 29 Wrote off $8,000 balance owed by Seeking Inc., which has filed bankruptcy.

Sept. 20 Reinstated the account of Leaking Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $10,500 cash in full payment of the account.

Dec. 31 Wrote off the following accounts as uncollectible (compound entry): Reeking Co., $4,000; Teaking, Inc., $2,500 and Weeking Corporation, $3,800.

Instructions:

Record the January 1 credit balance of $22,800 in a T account for Allowance for Doubtful Accounts.

Journalize the transactions. Post each entry that affects the following selected T account and determined the new balances:

Allowance for Doubtful Accounts

Bad Debt Expense

Journalize the adjusting entry to record bad debt expense; if an analysis of the $975,000 of accounts receivable estimates that $14,000 will be uncollectible.

Calculate expected net realizable value based upon the results from Part 3.

Assume that instead of basing the provision of uncollectible accounts on an analysis of receivables the adjusting entry on December 31 had been based on an estimated expense of 1.5% of net sales of $1,000,000 for the year, determine the following:

Bad debt expense for the year (by recording a new journal entry)

Balance in the allowance account after the adjustment from #5 part a.

Expected net realizable value of accounts receivable using #5 part b.