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Miller, Inc., analyzed its accounts receivable balances at December 31 and arrived at the aged balances listed below, along with the percentage that is estimated
Miller, Inc., analyzed its accounts receivable balances at December 31 and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible:
Age Group
BalanceProbability of
Noncollection0-30 days past due$180,0001%31-60 days past due40,0003%61-120 days past due22,0005%121-180 days past due14,00010%Over 180 days past due8,00025%$264,000
The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $1,150 on December 31, before any adjustments.
- Prepare the adjusting entry for estimated credit losses on December 31.
- Prepare the journal entry to write off the Lyons Company's account on April 10 of the following year in the amount of $525.
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