Problem # 1: Accounts Receivable Aging, Allowance and Adjusting Entries (25 points) From inception of operations to December 31, 2020, Fortner Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts 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 to the allowance account were made. Fortner's usual credit terms are net 30 days. The balance in Allowance for Doubtful Accounts was $130,000 (Cr.) at January 1, 2020. During 2020, credit sales totaled $9,000,000, the provision for doubtful accounts was determined to be $180,000 $90,000 of bad debts were written off, and recoveries of accounts previously written off amounted to $15,000. Fortner installed a computer system in November 2020, and an aging of accounts receivable was prepared for the first time as of December 31, 2020. A summary of the aging is as follows. Classification by Balance in Estimated Month of Sale Each Category % Uncollectible November-December 2020 $1,080,000 2% July-October 650,000 January-June 420,000 25% Prior to 1/1/20 150,000 80% $2,300,000 Based on the review of collectibility of the account balances in the prior to 1/1/20" aging category, additional receivables totaling $60,000 were written off as of December 31, 2020. The 80% uncollectible estimate applies to the remaining $90,000 in the category. Effective with the year ended December 31, 2020, Fortner adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable. Required: (show all your calculations) a. Prepare an accounts receivable aging schedule and a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2020. Show supporting computations in good form. (Hint: In computing the 12/31/20 allowance, subtract the $60,000 write-off.) b. Prepare the journal entry for the year-end adjustment to Allowance for Doubtful Accounts balance as of December 31, 2020. 10% Problem # 2: Journalizing Various Receivable Transactions (20 points) The trial balance before adjustment for Phil Collins Company shows the following balances. Dr. Cr. Accounts Receivable $82,000 Allowance for Doubtful Accounts 2,120 Sales Revenue $430,000 * Note: This account is showing a debit balance, which is unusual, but it is a valid balance. Required: (show all your calculations) Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.) 1. To obtain additional cash, Collins factors without recourse $25,000 of accounts receivable with Stills Finance. The finance charge is 10% of the amount factored. 2. To obtain a 1-year loan of $55,000, Collins pledges $65,000 of specific receivable accounts to Crosby Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Crosby Financial 3. The company wants to maintain the Allowance for Doubtful Accounts at 5% of gross accounts receivable. 4. Based on an aging analysis, an allowance of $5,800 should be reported. Assume the allowance has a credit balance of $1,100. Bonus: Bank Reconciliation and Adjusting Entries (10 points) Angela Lansbury Company deposits all receipts and makes all payments by check. The following information is available from the cash records. June 30 Bank Reconciliation Balance per bank $ 7,000 Add: Deposits in transit 1,540 Deduct: Outstanding checks (2,000) Balance per books $ 6,540 15 Month of July Results: Per Bank Per Books Balance July 31 $8,650 $9,250 July deposits 5,000 5,810 July checks 4,000 3,100 July note collected (not included in July deposits) 1,000 July bank service charge July NSF check from a customer, returned by the bank 335 (recorded by bank as a charge) Required: (show all your calculations) a. Prepare a bank reconciliation for July 31, going from balance per bank and balance per book to correct cash balance. b. Prepare the general journal entry or entries to correct the Cash account at July 31