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 7-4 From its rst day of operations to December 31, 2017, Ayayai Corp. provided for uncoliectible 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 o were credited to the allowance account, and no year-end adjustments were made to the allowance account. Avayai's usual credit terms were net 30 days, and remain unchanged. The balance in Allowance for Doubtful Accounts was $184,200 at January 1, 201?. During 201?, credit sales totalled $9.25 million, interim entries for bad debt expense were based on 2.00% of credit sales, $94,600 of bad debts were written off, and recoveries of accounts previously written off amounted to $15,100. 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 % uncolleclible NovemberiDecember 2017 $1,074,000 8% July-October 2017 656,000 12.6% January-June 201? 421,500 21% Before January 1, 2017 141,000 58% $2,292,500 Based on a review of how collectible the accounts really are in the \"Before January 1, 2017" aging category, additional receivables totalling $69,400 were written off as at December 31, 2017. The 58% uncollectible estimate therefore only applies to the remaining $71,600 in the category. Finally, beginning with the year ended December 31, 201?, Ayayai adopted a new accounting method for estimating the allowance for doubtful accounts: it now uses the amount indicated by the year-end 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 $ 59 , 400 write off of receivables . !" Bad debt expense accrual } Year End Balance 5 SHOW LIST OF ACCOUNTS* 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 " for the amounts . ) Account Titles and Explanation Debit Credit " To record adjustment resulting from a change in accounting estimate )List Of Accounts Problem ?-4 Accounts Payable Accounts Receivable Accrued Liabilities Accumulated Depreciation Advances to Employees Advertising Expense Allowance for Doubtful Accounts Bad Debt Expense Cash Cash Over and Short Delivery Expense Due from Factor Due to Customer Equipment Finance Expense Finance Revenue Freight-in Freightout Gain on Sale of Equipment Gain on Sale of Land Interest Expense Interest Income Interest Receivable Inventory Land Loss on Impairment Loss on Sale of Receivables Miscellaneous Expense No Entry Notes Payable Notes Receivable Ofce Expense - Bank Charges Ofce Expense - Dther Petty Cash Prepaid Expenses Purchase Discounts Recourse Liability Sales Discounts Sales Discounts Forfeited Sales Returns and Allowances Sales Revenue Servicing ljabilities Service Revenue Supplies Supplies Expense Unearned Revenue