Starlight, a Broadway media firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end an aging of the accounts receivable produced the following five groupings.

a. Not yet due	$500,000
b. 130 days past due	110,000
c. 3160 days past due	50,000
d. 6190 days past due	30,000
e. Over 90 days past due	60,000
Total	$750,000

On the basis of past experience, the company estimated the percentages probably uncollectible for the five age groups to be as follows: Group a, 1 percent; Group b, 3 percent; Group c, 10 percent; Group d, 20 percent; and Group e, 50 percent.

The Allowance for Doubtful Accounts before adjustments at December 31 showed a credit balance of $4,700.

Instructions:

1. Compute the estimated amount of uncollectible accounts based on the above classification by age groups. (5 points)

2. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. (5 points)

Date	Account Titles and Explanation	Debit	Credit

3. Determine the net realizable value of the companys accounts receivable at year-end. (5 points)

4. Explain the relationship between the matching principle and the need to estimate uncollectible accounts receivable. (10 points)