Graham, Inc., analyzed its accounts receivable balances at December 31, and arri

Question

Graham, Inc., analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: Probability of Balance Noncollection 196 36 Age Group 0-30 days past due $190,000 27,000 61-120 days past due 29,000 121-180 days past due 16,000 Over 180 days past due_11000 $273,000 31-60 days past due 1026 20% The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $1,740 on December 31, before any adjustments. a. Prepare the adjusting entry for estimated credit losses on December 31 b. Prepare the journal entry to write off the Matthews Company's account on April 10 of the following year in the amount of $1,380 a. General Journal Date Description Debit Credit Dec.31 To record allowance for credit losses. b. General Journal Date Description Debit Credit April 10 To write off Matthews Company' s account.

Explanation / Answer

Schedule :

Journal entry :

Account receivable % uncollectible Uncollectible amount 0-30 days 190000 1% 1900 31-60 days 27000 3% 810 61-120 days 29000 6% 1740 121-180 days 16000 10% 1600 Over 180 days 11000 20% 2200 Total 8250

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