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The Daily DAWN, a publishing company uses the balance sheet approach to estimate uncollectible accounts...

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Accounting

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The Daily DAWN, a publishing company uses the balance sheet approach to estimate uncollectible accounts expense. A year-end an aging of the accounts receivable produced the following five groupings: BE AGING GROUP AMOUNTS TO COLLECTED (Rs) 5,50,000 UNCOLLECTIBLE PERCENTAGE NOT YET DUE 1% 2,35,000 1-30 DAYS PAST DUE 3% 31-60 DAYS PAST DUE 10% 95,000 18,500 61-90 DAYS PAST DUE 20% 37,500 OVER 90 DAYS PAST 40% DUE The above table shows that with the increase in days past due, percentage of doubtful amount (uncollectible) also increases. The Allowance for Doubtful Accounts before adjustment at December 31, 2019 showed a credit balance of Rs. 12,500. Required: 0) Compute the estimated amount of uncollectible accounts based on the above classification by age groups. (ii) Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. (iii) Assume yourself as accountant at Daily Dawn and suggest the treatment of Account Receivable using the Income Statement approach, how would you explain this approach

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