Question:ACCOUNTS RECEIVABLE

AND BAD DEBT COMPUTATIONS

During 2017, Hannah Corporation had a total of $ 2,500,000 in gross sales, and $75,000 of sales returns and allowances. 80 percent of the total sales were on credit and all sales returns and allowances were from the sales on credit.Also in 2017, $30,000 of accounts receivable were determined to be uncollectible.At year-end, before the write off of any uncollectible accounts, the Accounts Receivable balance showed a total of $ 1,150,000, which was aged as follows:

AGEAMOUNT

Current$950,000

1 - 30 days past due100,000

31 - 60 days past due50,000

61 - 90 days past due35,000

over 90 days past due15,000

__________

$ 1,150,000

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PRESENT EACH ANSWER AND COMPUTATION ON A SEPARATE SHEET OF PAPER.IDENTIFY EACH PAGE WITH YOUR NAME AND METHOD OF ACCOUNTING FOR BAD DEBTS.

Assume, where applicable, that the Allowance for Doubtful Accounts has a credit balance of $ 31,250 at year-end, before the actual bad debts were written off.

1.Use the direct write-off method.Assume that all accounts determined to be uncollectible are written off in a single year-end entry.

2.Based on experience, annual uncollectible accounts are estimated to be approximately 15.2% of net sales on account for the year.

3.Based on experience, uncollectible accounts for the year are estimated to be approximately 7.5% of total accounts receivable.

4.Based on experience, uncollectible accounts are estimated tobe the sum of

1 percent of current accounts receivable

6 percent of accounts1 - 30 days past due

13 percent of accounts 31 - 60 days past due

22 percent of accounts 61 - 90 days past due

35 percent of accounts over 90 days past due

REQUIRED: Prepare the journal entries, in good form, required at year end to properly record bad debt expense (doubtful accounts expense) under each of the above INDEPENDENT methods.