Chapter 8 Homework Quiz les urse.com/platform/mod/quizjattempt.php?attempt-14688

Question

Chapter 8 Homework Quiz les urse.com/platform/mod/quizjattempt.php?attempt-1468874 xa... Waylens Horizon X Xavier University CLICK HERE TO REVIEW LEARNING OBJECTIVES QUESTION 1 Not yet answered Marked out of 10.00 Flag question Credit Losses Based on Accounts Receivable 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 0-30 days past due $160,000 24,000 61-120 days past due 26,000 121-180 days past due 13,000 Over 180 days past due 8,000 $231,000 Noncollection 1% 3% 5% 10% 20% Age Group 31-60 days past due The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $1,440 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 $1,080 a. General Journal

Explanation / Answer

Age Group Balance Probability of Noncollection Amount 0-30 days past due $ 1,60,000 1% $ 1,600 31-60 days past due $     24,000 3% $      720 61-120 days past due $     26,000 6% $ 1,560 121-180 days past due $     13,000 10% $ 1,300 Over 180 days past due $        8,000 20% $ 1,600 $ 2,31,000 $ 6,780 The entry is to be passed for = Probable Amount of Noncollection - Credit balance of Allowance for Doubtful Accounts as on December-31 The entry to be passsed for = $ 6,780 - $ 1,440 Journal entries Date Account titles Debit Credit a. Dec-31 Bad Debt - Expense $        5,340 Allowance for Doubtful Accounts $                5,340 (To record allowance for credit losses) b. Apr-10 Allowance for Doubtful Accounts $        1,080 Accounts Receivable $                1,080 (To write off Matthews Company's account)

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