Accounting for uncollectible accounts using the allowance method, and reporting receivables on the balance sheet
At September 30, 2012, the accounts of Mountain Terrace Medical Center (MTMC) include the following:
Accounts receivable $145,000
Allowance for uncollectible accounts (credit balance) 3,500
Dec 28 During the last quarter of 2012, MTMC completed the following selected transactions:
Dec 31 Wrote off accounts receivable as uncollectible: Regan, Co., $1,300; Owen Mac, $900; and Rain, Inc., $700.
Recorded uncollectible account expense based on the aging of accounts receivable, as follows:
Age of Accounts
Accounts receivable 1-30 Days 31-60 Days 61-90 Days Over 90 Days
$165,000 $97,000 $ 37,000 $14,000 $ 17,000
Estimated percent uncollectible 35% 0.3% 3% 30%
Requirements
1. Journalize the transactions.
2. Open the Allowance for uncollectible accounts T-account, and post entries affecting that account. Keep a running balance.
3. Show how Mountain Terrace Medical Center should report net accounts receivable on its December 31, 2012 balance sheet. Use the three line reporting format.