![]() What advantages would such a policy offer?Īccounts receivables are debts owed to your company, usually from sales on credit. The firm is considering the adoption of a policy whereby clients whose outstanding accounts become more than 60 days past due will be required to sign an interest-bearing note for the full amount of their outstanding balance. Prepare the journal entry required on January 10 to write off this account.ĭ. Assume that on January 10 of the following year, Putnam & Putnam learned that an account receivable that had originated on September 1 in the amount of $5,160 was worthless because of the bankruptcy of the client, Safeland Co. ![]() Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount.Ĭ. Compute the estimated amount of uncollectible accounts based on the given classification by age groups.ī. The Allowance for Doubtful Accounts before adjustment at December 31 showed a credit balance of $7,080.Ī. On the basis of past experience, the company estimated the percentages probably uncollectible for the five age groups to be as follows: Group a, 1 percent Group b, 3 percent Group c, 10 percent Group d, 20 percent and Group e, 50 percent. At year-end, an aging of the accounts receivable produced the following five groupings.Ī. Question: Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible accounts expense.
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