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Xia, Inc. estimated doubtful accounts receivable at December 31, 2019 at $10,116, based on estimates on various ages of receivables and before learning of the
Xia, Inc. estimated doubtful accounts receivable at December 31, 2019 at $10,116, based on estimates on various ages of receivables and before learning of the bankruptcy of one of its customers. The customer owed $4,020, and the legal department has estimated costs to collect the balance owed by this customer at $6,000. The gross receivables balance on December 31, 2019 after write-offs is $252,900, and the allowance for doubtful accounts balance is $10,860 at December 31, 2018. At December 12, 2019, the company wrote off $5,100 of other accounts deemed uncollectible. Required: a. How would the legal department advise Xia to handle the collection of the $4,020? b. Draw a t-account for Allowance for Doubtful Accounts and post all 2019 amounts to it, assuming that both the $5,100 and $4,020 have been written off. c. What is the effect of the $5,100 write off on gross and net accounts receivable
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