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Estimate Uncollectible Accounts For several years, EquiPrime Co.'s sales have been on a cash only basis. On January 1, 2012, however, EquiPrime Co. began
Estimate Uncollectible Accounts For several years, EquiPrime Co.'s sales have been on a "cash only" basis. On January 1, 2012, however, EquiPrime Co. began offering credit on terms of n/30. The amount of the adjusting entry to record the estimated uncollectible receivables at the end of each year has been % of 1% of credit sales, which is the rate reported as the average for the industry. Credit sales and the year-end credit balances in Allowance for Doubtful Accounts for the past four years are as follows: Allowance for Year Credit Sales Doubtful Accounts 2012 $12,500,000 $12,800 2013 12,600,000 23,000 2014 12,800,000 34,000 2015 13,000,000 49,000. Mandy Pulaski, president of EquiPrime Co., is concerned that the method used to account for and write off uncollectible receivables is unsatisfactory. She has asked for your advice in the analysis of past operations in this area and for recommendations for change. Instructions: 1. Determine the amount of (a) the addition to Allowance for Doubtful Accounts and (b) the accounts written off for each of the four years. 2012 20Y3 2014 20YS a. Addition to allowance for doubtful accounts 31,250 V 31,500 32,000 32,500 D. Accounts written off during year 18,450 v
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