PROBLEM 3

A summary of Milan Fashion's December 31, 2021, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:

Age Group Amount %

0-60 days $40,000 0.5

61-90 days 15,000 1.5

91-120 days 2,000 15.0

Over 120 days 800 80.0

The allowance for uncollectible accounts had a credit balance of $1,600 at January 1, 2021. During the year bad debts of $1,150 were written off. Also, $150 previously written off were paid by a customer.

Required:

1. Prepare all 2021 journal entries with respect to bad debts and the allowance for uncollectible accounts. Show computations.
2. Prepare a T account for the allowance for uncollectible accounts from 1/1 to 12/31/21.