From its first day of operations to December 31, 2017, Ayayai Corp. provided for uncollectible accounts receivable under the allowance method: entries for bad debt expense were made monthly based on 2.00% of credit sales, bad debts that were written off were charged to the allowance account, recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments were made to the allowance account. Ayayai's usual credit terms were net 30 days, and remain unchanged.

Problem 774 From its rst day of operations to December 3], 2017, Ayayai Corp. provided for uncoliectible accounls receivable under the allowance method: entries for bad debt expense were made monthly based on 2.00% of credit sales, bad debts that were written off were charged to the allowance account, recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments were made to the allowance account. Ayayai's usual credit terms were net 30 days, and remain unchanged. 111e balance in Allowance for Doubtful Accounts was $180,000 at January 1, 2017. During 201?, credit sales totalled $9.00 million, interim entries for bad debt expense were based on 2.00% of credit sales, $94,000 of bad debts were written off, and recoveries of accounts previously written off amounted to $13,000. Ayayai upgraded its computer facility in November 2017, and an aging of accounts receivable was prepared for the rst time as at December 31, 2017. A summary of the aging analysis follows: Classication by Month ofSale Balance in Each Category Estimated In uncolleclible NovembersDecember 2017 $ 1,060,000 8% July-October 2017 630,000 12.0% January-June 2017 410,000 20% Before January 1, 2011r 140,000 50% $2,240 000 Based on a review of how collectible the accounts really are in the \"Before January 1, 2017" aging category, additional receivables totalling $65,000 were written off as at December 31, 201?. The 50% uncoliectible estimate therefore only applies to the remaining $75,000 in the category. Finally, beginning with the year ended December 31, 201?, Ayayai adopted a new accounting method for estimating me allowance for doubtful accounts: it now uses the amount indicated by the yeariend aging analysis of accounts receivable. Calculate bad debt expense accrual and year end balance for the year Ended December 31 , 2017 . ( Hint : In calculating the allowance amount at December 31 , 2017 , Subtract the $55, 000 write off of receivables .!` Bad debt expense accrual $ Year End Balance* 5 SHOW LIST OF ACCOUNTS LINK TO TEXT* Prepare the journal entry for the year-end adjustment to the Allowance for Doubtful Accounts balance as at December 31 , 2017 . ( Credit account titles are automatically indented when amount is Entered . Do not indent manually . If no entry is required , Select "NO Entry " for the account titles and Enter O for the amounts . ) Account Titles and Explanation Debit Credit [ To record adjustment resulting from a change in accounting Estimate )