Credit Losses Based on Accounts Receivable Graham, Inc., analyzed its accounts receivable balances at December...
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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 Age Group Balance Noncollection 0-30 days past due $180,000 196 31-60 days past due 26,000 396 61-120 days past due 28,000 696 121-180 days past due 15,000 1096 Over 180 days past due 10,000 2096 $259,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $1,640 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 $1,280 a. Debit Credit General Journal Date Description Dec.31 Allowance for Doubtful Accounts Bad Debts Expense To record allowance for credit losses. $ $ b. Debit Credit General Journal Date Description April 10 Bad Debts Expense Allowance for Doubtful Accounts To write off Matthews Company's account.
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