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Alex Corporation operates in an industry that has a high rate of bad debts. Sales for the year were $5,000,000. Before any year-end adjustments, the balance in Alexs ' Accounts Receivable account was $880,000 and the Allowance for Doubtful Accounts had a debit balance of $10,000. The year-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below. Age Amount Probability of Collection Less than 16 days $450,000 0.98 Between 16 and 30 days 140,000 0.94 Between 31 and 45 days 175,000 0.86 Between 46 and 60 days 60,000 0.72 Between 61 and 75 days 40,000 0.45 Over 75 days 15,000 0.00 Required:

a. Prepare any necessary journal entries to write-off

b. What is the appropriate balance for the allowance for doubtful accounts at year end?

C. Prepare the adjusting journal entry at December 31st to record estimated bad debt expense.

D. How would the journal entry in C) change if the beginning balance in the allowance account is a credit of $10,000, not a debit. Assume part A) still occurred.

E. Prepare the journal entry that would be recorded if $5,000 of the accounts written off previously are re unstated and collected. (Assume that this occurs after previous entries have all been made!) (it will not impact previous answers!)

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