Reference no: EM132267337

Assignment: 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 1.5% 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 $64,240, and the balance of accounts receivable was $497,100.

During 2018, Wright wrote-off $53,500 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 customer's account with a $6,500 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 1.5% of credit sales throughout 2018. Monthly sales for 2018 are as follows:

January $ 72,000

February 99,800

March 80,600

April 101,000

May 102,400

June 88,200

July 77,400

August 91,400

September 81,600

October 105,600

November 97,800

December 86,200

Total cash collections of accounts receivable during 2018 (not including the collection of the previously written-off account) were $987,600.

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

Percentage of

Age of Account Receivable      Accounts Receivable    Probability of Collection

0-30 days past due                         72%                            95%

31-60 days past due                       15%                            86%

61-90 days past due                        8%                             65%

greater than 90 days past due           5%                             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.