Straight, a Broadway media firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end managing of the accounts receivable produced the following five groupings: (20)

a)Not yet due$500,000

b)1-30 days past due110,000

c)31-60 days past due50,000

d)61-90 days past due30,000

e)Over 90 days past due60,000

Total$750,000

On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows:

Group-A 1%, Group-B 3%, Group-C 10%; Group-D 20% and Group-E 50%.

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

Instructions:

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

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