Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three categories as follows: (1) 1 to 30 days old, (2) 31 to 90 days old, and (3) more than 90 days old. Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 3%, (2) 15%, and (3) 35%, respectively.

At December 31, 2022, the unadjusted credit balance in the Allowance for Doubtful Accounts was $260. The total Accounts Receivable in each age category were: (1) 1 to 30 days old, $61,000, (2) 31 to 90 days old, $12,000, and (3) more than 90 days old, $3,000.

Required:

1. Calculate the estimate of uncollectible accounts at December 31, 2022.
2. Prepare the appropriate adjusting entry dated December 31, 2022.

a. Estimated uncollectible amounts:

b. Prepare the adjusting entry dated December 31, 2022