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EXERCISE 2 (25 points) Gladius Co. uses the balance sheet approach in estimating uncollectible accounts...

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Accounting

EXERCISE 2 (25 points) Gladius Co. uses the balance sheet approach in estimating uncollectible accounts expense. Its Allowance for Doubtful Accounts has a 2,400 credit balance prior to adjusting entries. It has just completed an aging analysis of accounts receivable on 31 December 2021. This analysis disclosed the following information: Age Group Percentage Considered Not yet due 1-30 days past due 31-60 past due Total Uncollectible 108,000 1% 62,000 28,000 2% 8% Camp Co. uses the income statement approach to account for uncollectible accounts. Its net credit sales for December are 480,000. Accounts receivable of 3,560 were determined to be worthless and were written off during December. Accounts receivable total 297,000 on December 31. Management feels that based on past experience, approximately 2% of net credit sales will prove to be uncollectible. Instructions: 2.1 Using the above information for both companies, calculate the appropriate balance for Allowance for Doubtful Accounts at 31 December 2021. (10 points) Prepare the year-end adjusting entries for uncollectible accounts in general journal. (10 points) 2.2 Explain the relationship between the matching principle and the need to estimate uncollectible accounts receivable. (5 points)

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