Uncollectible Accounts
GIVEN:	The ABC Company has just completed its fourth year of operations. Sales have tripled since in three years and ABCs
	management has asked you to evaluate its method of accounting for uncollectible accounts. The following information is
	provided to you. ABC generally writes-off uncollected accounts by the time they are 13 months past due.
	Sales: Year 1: $700,000 Year 2: $1,400,000 Year 3: $2,160,000 Year 4: $2,440,000
	Uncollectible Accounts:
		Year Account Receivable Originated	Year Account Receivable is Written Off
			Year 1	Year 2	Year 3	Year 4	Total
		From Year 1 Sales	$6,000	$8,500			$14,500
		From Year 2 Sales		$12,000	$9,800		$21,800
		From Year 3 Sales			$16,800	$15,000	$31,800
		From Year 4 Sales				$17,000	$17,000
		Total Written Off	$6,000	$20,500	$26,600	$32,000	$85,100
REQUIRED:
Part 1:	Assume that the direct write-off method is used. Give the journal entries for Year 1, Year 2 and Year 3 to
	recognize uncollectible accounts expense.
	a.		Year 1		Year 2		Year 3
	Assume that the allowance method is used.
	b.	Give the journal entries for Year 1, Year 2 and Year 3 to recognize uncollectible accounts expense
		assuming uncollectible accounts are estimated to be 1% of sales.
			Year 1		Year 2		Year 3
	c.	What would be the balance in the Allowance account at the end of Year 1, Year 2, and Year 3?
			Estimate	Written-off	Allow. Bal.
		Year 1
		Year 2
		Year 3
Part 2:	Suppose ABC Company uses the balance sheet approach to recognizing bad debt expense based on a year end accounts
	receivable aging schedule. The aging schedule as of 12/31/15 indicates that $92,000 in accounts receivable are estimated
	to become uncollectible. The allowance for doubtful accounts shows an unadjusted $1,000 debit balance immediately
	before the year end adjustment for bad debt expense. The 12/31/15 gross accounts receivable balance is $930,000.
	a.	Provide the 12/31/15 adjusting entry to record estimated bad debt expense.
			12/31/2015
	b	Indicate the 12/31/15 net realizable value of accounts receivable.
		A/R
		Less: allowance for doubtful accounts
		Net realizable value of A/R