Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(h) Prepare Journal Entries for Allowance for Doubtful Accounts Starlight, a Broadway media firm, uses the balance sheet approach to estimate the uncollectable accounts expense.

image text in transcribed
image text in transcribed
(h) Prepare Journal Entries for Allowance for Doubtful Accounts Starlight, a Broadway media firm, uses the balance sheet approach to estimate the uncollectable accounts expense. At year-end an aging of the accounts receivable produced the following five groupings: a. Not yet due $630,000 b. 1-30 days past due 230,000 C. 31-60 days past due 100,000 d. 61-90 days past due 62.000 e. Over 90 days past due 18,000 Total $1,040,000 On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group a, 1 percent: Group b, 3 percent; Group c, 10 percent; Group d, 20 percent; and Group e; 50 percent. The Allowance for Doubtful Accounts before adjustments at December 31 showed a credit balance of $6,000. 1.) Compute the estimated amount of uncollectible accounts based on the above classifcation by age groups. Amount of uncollectible accounts ii. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit iii.) Assume that on January 18 of the following year, Starlight learned that an account receivable that originated on August 1 in the amount of $1,600 was worthless because of the bankruptcy of the client, May Flowers. Prepare the journal entry required on January 18 to write off this account. (Credit account titles are automatically Indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit iv.) if the Allowance for Doubtful Accounts account had a debit balance of $5,000, how would your answer to part (11.) differ? (Credit account titles are automatically indented when the amount is entered. Do not Indent manually) Account Titles and Explanation Debit Credit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Environmental Audit A Compendium For Nicaragua

Authors: Amarus Aurelio Urbina

1st Edition

6203976547, 978-6203976540

More Books

Students also viewed these Accounting questions

Question

socialist egalitarianism which resulted in wage levelling;

Answered: 1 week ago

Question

soyuznye (all-Union, controlling enterprises directly from Moscow);

Answered: 1 week ago