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Problem 7-4 From inception of operations to December 31, 2017, Carla Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Carlas usual credit terms are net 30 days. The balance in Allowance for Doubtful Accounts was $148,200 at January 1, 2017. During 2017, credit sales totaled $9,018,900, the provision for doubtful accounts was determined to be $90,189, $90,189 of bad debts were written off, and recoveries of accounts previously written off amounted to $15,190. Carla installed a computer system in November 2017, and an aging of accounts receivable was prepared for the first time as of December 31, 2017. A summary of the aging is as follows. Classification by Month of Sale Balance in Each Category Estimated % Uncollectible NovemberDecember 2017 $1,285,900 2% JulyOctober 669,900 10% JanuaryJune 436,200 25% Prior to 1/1/17 153,600 85% $2,545,600 Based on the review of collectibility of the account balances in the prior to 1/1/17 aging category, additional receivables totaling $62,300 were written off as of December 31, 2017. The 85% uncollectible estimate applies to the remaining $91,300 in the category. Effective with the year ended December 31, 2017, Carla adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable.

Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2017. Show supporting computations in good form. (Hint: In computing the 12/31/17 allowance, subtract the $62,300 write-off.) CARLA CORPORATION Analysis of Changes in the Allowance for Doubtful Accounts For the Year Ended December 31, 2017 Balance at January 1, 2017Provision for doubtful accountsRecovery in 2017 of bad debts written off previouslyIncrease due to change in accounting estimate during 2017Balance at December 31, 2017 adjustedWrite-offs for 2017Balance at December 31, 2017 before change in accounting estimate $ Balance at December 31, 2017 before change in accounting estimateBalance at January 1, 2017Balance at December 31, 2017 adjustedWrite-offs for 2017Increase due to change in accounting estimate during 2017Provision for doubtful accountsRecovery in 2017 of bad debts written off previously Balance at December 31, 2017 before change in accounting estimateBalance at December 31, 2017 adjustedProvision for doubtful accountsBalance at January 1, 2017Recovery in 2017 of bad debts written off previouslyWrite-offs for 2017Increase due to change in accounting estimate during 2017 LessAdd : Provision for doubtful accountsBalance at December 31, 2017 adjustedBalance at January 1, 2017Recovery in 2017 of bad debts written off previouslyWrite-offs for 2017Balance at December 31, 2017 before change in accounting estimateIncrease due to change in accounting estimate during 2017 Increase due to change in accounting estimate during 2017Balance at December 31, 2017 adjustedBalance at January 1, 2017Recovery in 2017 of bad debts written off previouslyProvision for doubtful accountsWrite-offs for 2017Balance at December 31, 2017 before change in accounting estimate Recovery in 2017 of bad debts written off previouslyIncrease due to change in accounting estimate during 2017Balance at December 31, 2017 adjustedWrite-offs for 2017Balance at January 1, 2017Provision for doubtful accountsBalance at December 31, 2017 before change in accounting estimate Recovery in 2017 of bad debts written off previouslyWrite-offs for 2017Provision for doubtful accountsIncrease due to change in accounting estimate during 2017Balance at December 31, 2017 before change in accounting estimateBalance at December 31, 2017 adjustedBalance at January 1, 2017 $ Computation of Allowance for Doubtful Accounts at December 31, 2017 Aging Category Balance % Doubtful Accounts NovDec 2017 $ % $ JulyOct % JanJune % Prior to 1/1/17 % $ LINK TO TEXT

Prepare the journal entry for the year-end adjustment to the Allowance for Doubtful Accounts balance as of December 31, 2017. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Click if you would like to Show Work for this question: Open Show Work

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