Wiggins Corporation utilizes an accounting software package that is capable of producing a detailed aging of outstanding accounts receivable.Following is the aging schedule as of December 31, 2022.

AGE

AMOUNT OUTSTANDING

0 to 30 days

$1,200,000

31 to 60 days

700,000

61 to 120 days

200,000

Over 120 days

25,000

Casper Wiggins has owned and operated Wiggins Corporation for many years and has a very good sense of the probability of collection of outstanding receivables, based on an aging analysis.The following table reveals the likelihood of collection:

AGE

PROBABILITY OF COLLECTION

0 to 30 days

98%

31 to 60 days

90%

61 to 120 days

75%

Over 120 days

50%

QUESTIONS:

(d)Assume one of Wiggins customers has filed for banruptcy protection. Prepare the journal entry to write off the account, $21,000(2.5 points)

(e)Explain why the actual write-off will not result in a reduction of Wang Corporation's income. (2.5 points)

(f)Wiggins accepts credit card payments from customers. Charges on USExpress cards were $3,000.This card is not a bank (debit) card, and settlement does not occur until approximately two weeks following the date of the transaction.USExpress charges a 4% fee, and this amount is recorded on the day of sale. Prepare the journal entry for the credit card sales. (3.5 points)

(g)Prepare the journal entry for the eventual collection of the USExpress charges. (2.5 points)

Include memo entries for all journal entries!

(b)

GENERAL JOURNAL

Date

Accounts

Debit

Credit

Dec. 31

Uncollected Accounts Expense

141,500

Allowance of Uncollected Accounts

141,500

To adjust allowance account from $15,000 credit balance to the target balance of $156,500

(c)

GENERAL JOURNAL

Date

Accounts

Debit

Credit

Dec. 31

Uncollectible Accounts Expense

161,500

Allowance for Uncollectible Accounts

161,500

To adjust the allowance account from $5,000 debit balance to the target balance of $156,500 credit

(d)

GENERAL JOURNAL

Date

Accounts

Debit

Credit

Dec. 31

21,000

21,000

(e)

(f)

GENERAL JOURNAL

Date

Accounts

Debit

Credit

Dec. 31

(g)

GENERAL JOURNAL

Date

Accounts

Debit

Credit

Dec. 31