Culloden Ltd analysed its accounts receivable balances at 31 December 2020 and prepared an ageing analysis of the account as listed below. The percentage of each aged group that have been proven uncollectable in the past are shown next to the aged balances.

Age of Accounts	Estimated uncollectable %	Balance
Current	1%	$105,000
31-60 days past due	6%	68,000
61-90 days past due	25%	10,040
Over 90 days past due	45%	5,600

The company uses the allowances method to account for bad debts. On the 31^st December 2020 the credit balance of the Allowance for Doubtful Debts account was $4,200 before any adjustments. (No narrations are required for the journal entries).

Required:

a) Determine the total estimated uncollectable accounts for Culloden Ltd at 31 December 2020 (2 marks)

b) Prepare the adjusting entry at 31 December 2020 to record the bad debts expense (2 marks)

c) On the 3^rd December 2020 a $3,050 customer account balance is confirmed as uncollectable.

Provide the journal entry to record the write-off (2 marks)

d) If Culloden used the direct-write off method how would the journal entry in part (c) be recorded? (2 marks)

e) Why would Culloden Ltd use the allowance method of accounting for bad debts rather than the direct write-off method? (1 mark) Word limit: maximum 50 words

a)

You can type your answer for part (a) directly into the template below.

b and c)

Type your answer for parts (b) and (c) in the template below:

Date	Account Titles	Debit	Credit

d)