Revise your worksheet to reflect these updated assumptions then answer the questions that follow. You have been provided with the following Aging Report to use to adjust the Allowance for Uncollectible Accounts for a company at year end.

Age Group	Accounts Receivable					Estimated Percent Uncollectible
Not yet due		$	112,000				5	%
1-30 days past due			51,000				10	%
31-60 days past due			50,000				20	%
61-90 days past due			44,000				40	%
Over 90 days past due			29,000				80	%
		$	286,000

Allowance for Uncollectible Accounts	3,200	Credit

After reviewing the data, you note the 'not yet due' category is overstated by 20%, while the 'Over 90 days' category is understated by 20%, (this error also caused the AR balance on the schedule to not equal the amount of Accounts Receivable on the balance sheet). Also, you note the balance in the Allowance account is actually a debit, rather than a credit. Being that the normal balance for this account is a credit, the accountant hadn't noticed the issue. Required: 1. Use your spreadsheet to recalculate the needed adjustment and account balances. What will be the balance in Accounts Receivable and the Allowance for Uncollectible Accounts based on the above information?

2. Prepare the journal entry to adjust the Allowance for Uncollectible Accounts, using your corrected data. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

3. Which statement is true regarding the effect of the Allowance account being shown incorrectly as a credit rather than as a debit balance in the original account analysis?

• The error caused the journal entry to require a credit to Bad Debts Expense rather than a debit.

• Correcting the error increased the amount of Bad Debt Expense recorded for the period.

• Correcting the error decreased the amount of Bad Debt Expense recorded for the period.

• The Allowance account and the adjustment were not affected by the original misstatement, as it was only an estimate.