Using the data in Exercise 6-7, assume that the allowance for doubtful accounts for Fonda Bikes Co.

Question:

Using the data in Exercise 6-7, assume that the allowance for doubtful accounts for Fonda Bikes Co. had a negative balance of – $4,145 as of December 31, 2010. Illustrate the effects of the adjustment for uncollectible accounts as of December 31, 2010, on the accounts and financial statements.