E $6-7$ Estimating doubtful accounts

Obj. $4$

Easy Rider International is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December $31,20$Y$3,$ and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

Details

Table shows an aging of Easy Rider International$$s accounts receivable on December $31,20$Y$3,$ and a historical analysis of the percentage of uncollectible accounts in each age category. There are $3$ columns $-$ Age Interval, Balance, and Percent Uncollectible. Values are in dollars. The details in the same order are: Not past due: $1,850,000$; $1$ percent $130$ days past due: $750,000$; $2$ percent $3160$ days past due: $100,000$; $6$ percent $6190$ days past due: $60,000$; $14$ percent $91180$ days past due: $45,000$; $60$ percent Over $180$ days past due: $25,000$; $90$ percent The Balances show a total of $2,830,000$ dollars.

Estimate what the balance of Allowance for Doubtful Accounts should be as of December $31,20$Y$3.$

E $6-8$ Entry for uncollectible accounts

Obj. $4$

Using the data in Exercise $6-7,$ assume that the allowance for doubtful accounts for Easy Rider International had a negative balance of $$(13,300)$ as of December $31,20$Y$3.$

Illustrate the effects of the adjustment for uncollectible accounts as of December $31,20$Y$3,$ on the accounts and financial statements.