Credit Losses Based on Accounts Receivable

Miller, Inc., analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible:

Age Group	Balance	Probability of Noncollection
0-30 days past due	$92,000	2%
31-60 days past due	22,000	5%
61-120 days past due	13,000	10%
121-180 days past due	8,000	12%
Over 180 days past due	6,000	24%
	$141,000

The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $720 on December 31, before any adjustments.

1. Prepare the adjusting entry for estimated credit losses on December 31.
2. Prepare the journal entry to write off the Lyons Company's account on April 10 of the fa.

   General Journal
   Date	Description	Debit	Credit
   Dec.31
   	To record allowance for credit losses.

   b.

   General Journal
   Date	Description	Debit	Credit
   April 10	Allowance for Doubtful Accounts Bad Debts Expense Accounts Receivable - Lyons Company	$	$
   	Bad Debts Expense Accounts Receivable - Lyons Company Allowance for Doubtful Accounts
   	To write off Lyons Company's account.

   following year in the amount of $625.