Question: Accounting for uncollectible accounts using the allowance method (aging-of-receivables) and reporting receivables on the balance sheet At December 31, 2016, the Accounts Receivable balance of Lexington Financial Software is $205,000. The Allowance for Bad Debts account has a $16,530 debit balance. Lexington Financial Software prepares the following aging schedule for its accounts receivable:
Requirements: 1. Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2016.
2. Show how Lexington Financial Software will report its net accounts receivable on its December 31, 2016, balance sheet.