Q1) Montgomery Burns Company had $700 credit balance in Allowance for Doubtful Accounts at December 31, 2001, before current year's (2001) provision for uncollectible accounts. Aging of accounts receivable revealed following:
| |
|
Estimated Percentage Uncollectible |
| Current Accounts |
$120,000 |
1% |
| 1-30 days past due |
12,000 |
3% |
| 31-60 days past due |
10,000 |
6% |
| 61-90 days past due |
5,000 |
12% |
| Over 90 days past due |
8,000 |
30% |
| Total Accounts Receivable |
$155,000 |
|
Suppose that company uses percentage of receivables allowance method, make adjusting entry on December 31, 2001, to identify bad debts expense.