Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncol

ID: 2447377 • Letter: P

Question

Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end, an aging of the accounts receivable produced the following five groupings:

On the basis of past experience, the company estimated the percentages probably uncollectible for the above 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.

     The Allowance for Doubtful Accounts before adjustment at December 31 showed a credit balance of $5,900.


instructions:

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 $4,300 was worthless because of the bankruptcy of the client, Safeland Co. Prepare the journal entry required on January 10 to write off this account.

Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end, an aging of the accounts receivable produced the following five groupings:

Explanation / Answer

Date                     Accounts titles                              Debit                   Credit

Jan 10                 Bad Debts                                      $4300

                           Accounts receivable                                                  $4300

                  (being debts worth $4300 worthless recorded in the books )