intermediate accounting

Solution A7-7 Accounts Receivable-Estimation of Bad Debt Expense: The accounts of Long Company provided the following 20X5 information at 31 December 2005 (end of the annual period): $51,000 3,000 1,000 Accounts receivable balance, 1 January 20X5 Allowance for doubtful accounts balance, 1 January 20X5 Uncollectible account to be written off during 20x5 (ex-customer Slo) Cash collected on accounts receivable during 20X5 170,000 Estimates for bad debt losses: a. Based on ending balance of accounts receivable, 8%. b. Based on aging schedule (excludes Slo's account): Accounts Receivable Probability of Noncollection 2% $28,000 Age Less than 30 days 31-90 days 10 7,000 3,000 30 91-120 days More than 120 days 2,000 60 Required: 1. Give the entry to write off customer Slo's long-overdue account. 2. Give all entries related to accounts receivable and the allowance account for the following two cases. Case A--Bad debt expense is based on the ending balance of accounts receivable Case B-Bad debt expense is based on aging 3. Show how the results of applying each case above should be reported in 20x5 earnings and on the 20x5 statement of financial position. 4. Briefly explain and evaluate each of the three methods used in Cases A and B. 5. On 1 August 20X6, customer Slo paid his long-overdue account in full. Give the required entries