90.2K

Verified Solution

Link Copied!

PS. AA (LO2) Rigney Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year-end Journalice truncontrolled to be debts Worksheet De 18 B D E G 1 2 0-30 Total 200,000 Number of Days Outstanding 31-60 61-90 91-120 46,000 39,000 23,000 4% 5% 77,000 1% Over 120 15,000 20% 89 Accounts receivable 5 Suncollectible 6 Estimated bad debts a. Tot est. bad debts 59.400 Instructions a. Calculate the total estimated bad debts based on the above information b. Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Ac- counts is an $8,000 debit. c. Of the above accounts, S5.000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account d. The company collects $5,000 subsequently on a specific account that had previously been deter- mined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection. . Comment on how your answers to (a)-(d) would change if Rigney Inc. used 4% of total accounts receivable rather than aging the accounts receivable. What are the advantages to the company of aging the accounts receivable rather than applying a percentage to total accounts receivable

Answer & Explanation Solved by verified expert

See Answer