ESTIMATION AND RECORDING OF UNCOLLECTIBLE ACCOUNTS - AGING OF ACCOUNTS RECEIVABLE METHOD Part 1 - In 2009, Vandolay reported $300,000 in sales. The company's allowance for doubtful accounts has an unadjusted credit balance of $12,000. Vandolay Industries accountants prepared the following Aging of Accounts Receivable: Customer Alpha Sales Gamma Manufacturing Co. Delta Shipping Corp. Epsilon Industries Theta Manufacturing Zeta Industries Other customers Totals Number of days unpaid Total 0-30 30-60 60-90 Over 90 $ 700 $ 700 1,900 $ 1.900 2,200 $2,200 6,000 $6,000 1,800 1,800 600 600 136,800 88,100 26,900 9,800 12,000 S150,000 $90,000 $30,000 $12,000 $18,000 Vandolay accountants believe that receivables 0-30 days old have a 2% chance of noncollection Receivables 30-60 days old have a 4% chance of noncollection. Receivables 60-90 days old have an 8% chance of noncollection. Receivables over 90 days old have a 20% chance of noncollection. The company's allowance for doubtful accounts has an unadjusted credit balance of $12,000. Prepare the required adjusting journal entry. Bad Debt Expense Allowance for Doubtful Accounts 7-2 Part 2 - Assume instead that the company's allowance for doubtful accounts has an unadjusted debit balance of $400. Prepare the required adjusting journal entry. Bad Debt Expense Allowance for Doubtful Accounts 7-3