Part I Accounts Receivable Allowance for Doubtful Accounts

You have been assigned to assist on the audit is Accounts Receivablemore specifically the Allowance for Doubtful Accounts. You performed the following analysis for the Allowance for Doubtful Accounts:

Description	Amount	Tick Mark
Beginning Balance	$ 154,000
Increase (2% of $10,000,000 credit sales)	200,000	?
Write offs	(95,000)	?
Recovery of previously written off accounts	15,000
Ending Balance	$274,000
Tick Mark Legend:
Traced to prior year's audit documentation.
Calculated.		?
Reviewed authorization memorandum from the Treasurer.		?
Traced to cash receipts and reviewed supporting documentation.
Footed.		?
Traced to the 12/31/17 general ledger.

After several discussions with Alphas controller and the audit partner, it has was determined that Alpha should adopt the aging method for estimating the Allowance for Doubtful Accounts.

A summary of the aging is as follows:

Classification by Month of Sale	Balance	Estimated % Uncollectible
November-December 2017	$1,080,000	2%
July-October 2017	640,000	10%
January-June 2017	420,000	25%
Prior years*	150,000	70%
Total	$2,300,000
*$60,000 of these are totally uncollectible and should be written off prior to the year-end adjustment.

Required:

Prepare the entry to write off the accounts from the prior years. Prepare the proposed necessary adjusting journal entry to ensure that the Allowance for Uncollectible Accounts is in accordance with generally accepted accounting principles as of December 31, 2017. All journal entries should be in proper form including an explanation. Do not use any abbreviations. Show supporting calculations