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Quality Inc. generated $2.75 million in credit sales during the current year. The balance of...

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Accounting

Quality Inc. generated $2.75 million in credit sales during the current year. The balance of the allowance for doubtful accounts at December 31 is $2,500 debit. Accounts receivable at December 31 consists of the following:

Account Classification Amount Estimated Percentage Uncollectible

1 - 30 days $350,000 1.5%

31 - 60 days 180,000 3%

61 -90 days 55,000 5%

Over 90 days 21,000 25%

Instructions:

a) Calculate and record the journal entry for bad debt expense for the current year using the aging of accounts receivable approach.

b) Quality Inc. has decided to write off $15,000 of the accounts that were over 90 days old. Record the journal entry.

c) What is the balance for Accounts Receivable as shown on the December 31 statement of financial position?

d) One of the customers whose $2,200 account was written off paid in full. Record the journal entry.

e) Is the balance in the allowance for doubtful accounts affected by the transaction in part d)? If so, by how much? What is the new balance?

Note: Please answer the option (e).

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