5. Chao Corporation uses the accounts receivable aging method to account for Unc

Question

5. Chao Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense. As of December 31, Chao's accountant prepared the following data about ending receivables: $40,000 was not yet due (1 percent expected not to be collected), $20,000 was 1-60 days past due (4 percent expected not to be collected), and $4,000 was over 60 days past due (8 percent expected not to be collected). At December 31, Allowance for Uncollectible Accounts had a credit balance prior to adjustment of $400. In the journal provided, prepare Chao's end-of-period adjustment for estimated uncollectible accounts. Also prepare the entry that would have been made had the credit balance instead been a debit balance.

GENERAL JOURNAL

Date

Description

Post.

Ref.

Debit

Credit

Dec.

31

Uncollectible Accounts Expense

$

Allowance for Uncollectible Accounts

$

31

Uncollectible Accounts Expense

$

Allowance for Uncollectible Accounts

$

GENERAL JOURNAL

Date

Description

Post.

Ref.

Debit

Credit

Dec.

31

Uncollectible Accounts Expense

$

Allowance for Uncollectible Accounts

$

31

Uncollectible Accounts Expense

$

Allowance for Uncollectible Accounts

$

Explanation / Answer

Accounts Receivable aging method Not Due 1-60 days Over 60 Days Amount 40,000.00 20,000.00             4,000.00 Not to be collected 1% 4% 8% Amount of bad debt        400.00        800.00                320.00

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