Reference no: EM132875448
Question - Diebold Corp. made $1,500,000 in sales during 2017. Twenty percent of these were cash sales. During the year, $72,000 of accounts receivable were written off as being uncollectible. In addition, $40,000 of the accounts that were written off in 2016, were unexpectedly collected in 2017. At its' year-end December 31, 2017, Diebold had a balance of $525,000 in accounts receivable. The balance in the Allowance for Doubtful Accounts general ledger account was $112,500 credit at December 31, 2016.
|
Age (days)
|
Accounts Receivable
|
|
1-30
|
$210,000
|
|
31-60
|
105,000
|
|
61-90
|
52,500
|
|
91-120
|
126,000
|
|
Over 120
|
31,500
|
|
Total
|
$525,000
|
Required -
1) Prepare journal entries to record the following 2017 transactions:
a. The write-off of $72,000
b. The recovery of $40,000
2) Recalculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2017.
3) The estimated uncollectible accounts at December 31, 2017 are calculated as follows:
|
Age (days)
|
Estimated Loss percentage
|
|
1-30
|
2%
|
|
31-60
|
4%
|
|
61-90
|
6%
|
|
91-120
|
10%
|
|
Over 120
|
40%
|
Required - Prepare the adjusting entry required at December 31, 2017.