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 early 2010. 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 2018, Wright provided for uncollectible accounts receivable with a monthly provision of 1% 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, 2017, the adjusted balance of the allowance for uncollectible accounts was $21,500, and the balance of accounts receivable was $156,500.

During 2018, Wright wrote-off $19,000 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 $2,500 balance, which had been written-off in June 2016, was subsequently collected from the customer in April 2018. Wright maintained the same monthly provision of 1% of credit sales throughout 2018. Monthly sales for 2018 are as follows:

January $ 43,500

February 56,000

March 62,600

April 49,200

May 53,800

June 46,500

July 72,400

August 57,400

September 81,000

October 65,800

November 49,200

December 62,600

Total cash collections of accounts receivable during 2018 (not including the collection of the previously written-off account) were $667,500.

In preparation for its year-end closing process, Wrights controller prepared the following aging of accounts receivable as of December 31, 2018, assigning probabilities of collection based on discussions with Wrights credit manager:

Percentage of

Age of Account Receivable % of Accounts Receivable Probability of Collection

0-30 days past due 70% 95%

31-60 days past due 15% 80%

61-90 days past due 9% 60%

greater than 90 days past due 6% 10%

Requirements

a) Prepare an analysis computing the unadjusted balance in the allowance for uncollectible accounts as of 12/31/18.

b) Prepare the year-end adjusting journal entry to record bad debt expense based on the December 31, 2018 aging of accounts receivable.