Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $364,900 in its Accounts Receivable account and a credit balance of $4,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $370,000 in debit balances and $5,100 in credit balances. The company aged its accounts as follows: Current $303,000
0-60 days past due 42,000
61-180 days past due 17,000
Over 180 days past due 8,000
$370,000
In the past, the company has experienced credit losses as follows: 1% of current balances, 5% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 40% of balances over six months past due. The company bases its allowance for doubtful accounts on an aging analysis of accounts receivable.
Required:
a. Prepare the adjusting entry to record the allowance for doubtful accounts for the year.
b. Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.

a. First calculate the adjusting entry to record allowance.

Uncollectible for the year is;

= (303,000 * 1%) + (42,000 * 5%) + (17,000 * 15%) + (8,000 * 40%)

= $10,880

Adjusting entry = Uncollectable amount - Credit balance on allowance

= 10,880 - 4,200

= $6,680

DR Bad Debt Expense                                                     $6,680

     CR Allowance for Doubtful accounts                                      $6,680

b.

Current Assets:

Accounts Receivable                                      $370,000

Less: Allowance for doubtful accounts         ($10,880)

                                                                           $359,120

Current Liabilities

Customers Overpayments                                $5,100

The current liability above arises from the credit balance of $5,100 in the Accounts receivable account. Accounts Receivable should have a debit balance so if a credit balance occurs it is an overpayment by a customer.

d. to get countries or companies to stop doing something objectionable.

answer; microeconomics;