The following specifies the requirements for Case Assignment #1. This assignment must be submitted in class at the beginning of the class period on Thursday, October 21. Any assignment submitted late will incur a substantial penalty.

Each case submitted must be each students own work; collaboration among students is not permitted (see the course syllabus for a further description of the Academic Dishonesty policy). Each case solution must prepared using Excel. Handwritten work will not be accepted and, if submitted, will not be graded. Your solution must include all supporting calculations and these supporting calculations must be performed with appropriate Excel formulas. Failure to do so will result in a reduction in points. For each case, you must submit one printed copy of the Excel spreadsheet which contains your case solution and a second printed copy displaying the formulas contained in each cell of the spreadsheet. Be sure to format your spreadsheet so that your work is clearly presented and easy to review.

Wright Products Company

Wright Products Company was founded in 2004. Wright offers credit terms (net 30 days) to all of its customers. As Wright has been required to write-off several customer accounts, Wright uses the allowance method to provide for uncollectible receivables. During 2021, Wright provided for uncollectible accounts receivable with a monthly provision of 1.0% of credit sales. However, at year-end, an aging of accounts receivable is prepared and the allowance for uncollectible accounts is adjusted based on an analysis of the aging. At December 31, 2021, the adjusted balance of the allowance for uncollectible accounts was $31,550, and the balance of gross accounts receivable was $272,400.

During 2021, Wright wrote-off $29,300 of customer accounts that were deemed to be uncollectible, due to customers declaring bankruptcy or experiencing financial difficulties so severe that extensive collection efforts were not successful. One customers account with a $4,700 balance, which had been written-off in May 2019, was subsequently collected from the customer in April 2021. Wright maintained the same monthly provision of 1.0% of credit sales throughout 2021. Monthly credit sales for 2021 are as follows:

January $78,000

February 81,000

March 74,000

April 93,000

May 90,000

June 71,000

July 62,000

August 56,000

September 65,000

October 90,000

November 87,000

December 83,000

Total cash collections of accounts receivable during 2021 (not including the collection of the previously written-off account) were $893,100.

In preparation for its year-end closing process, Wrights controller prepared the following aging of accounts receivable as of December 31, 2021, assigning probabilities of collection based on discussions with Wrights credit manager:

Percentage of

Age of Account Receivable Accounts Receivable Probability of Collection

0-30 days past due 80% 90%

31-60 days past due 10% 85%

61-90 days past due 6% 60%

Greater than 90 days past due 4% 10%

Requirements

a) Prepare an analysis computing the unadjusted balance in the allowance for uncollectible accounts as of 12/31/21.

b) Prepare the year-end adjusting journal entry to record bad debt expense based on the

December 31, 2021 aging of accounts receivable.