Question

Pearl E. White Orthodontist specializes in correcting misaligned teeth. During 2021, Pearl provides services on account of $589,000. Of this amount, $79,000 remains receivable at the end of the year. An aging schedule as of December 31, 2021, is provided below.
  

Age Group	Amount Receivable					Estimated Percent Uncollectible
Not yet due		$	39,000				5	%
0-90 days past due			15,900				10	%
91–180 days past due			10,900				30	%
More than 180 days past due			13,200				80	%
Total		$	79,000

Required:

1. Calculate the allowance for uncollectible accounts.

	Age Group Estimated Amount Uncollectible Not yet due 0-90 days past due 91-180 days past due More than 180 days past due Total $0

Record December 31, 2021, adjusting entry, assuming the balance of Allowance for Uncollectible Accounts before adjustment is $4,900

• Record the adjusting entry for Uncollectible Account

	Date General Journal Debit Credit December 31, 2021

On July 19, 2022, a customer’s account balance of $7,900 is written off as uncollectible. Record the write-off.

• Record write off of actual bad debts.

	Date General Journal Debit Credit July 19, 2022

September 30, 2022, the customer whose account was written off in part 3 unexpectedly pays the full amount. Record the cash collection.

• Record the entry to re-establish the account previously written off.

Note: Enter debits before credits.

	Date General Journal Debit Credit September 30, 2022

• Record cash received on account.

	Date General Journal Debit Credit September 30, 2022

Answer 1

1
Age Group	Estimated Amount Uncollectible
Not yet due	1950	=39000*5%
0-90 days past due	1590	=15900*10%
91-180 days past due	3270	=10900*30%
More than 180 days past due	10560	=13200*80%
Total	17370

2
Date	General Journal	Debit	Credit
December 31, 2021	Bad debts expense	12470		=17370-4900
	Allowance for Uncollectible Accounts		12470
3
Date	General Journal	Debit	Credit
July 19, 2022	Allowance for Uncollectible Accounts	7900
	Accounts Receivable		7900
4
Date	General Journal	Debit	Credit
September 30, 2022	Accounts Receivable	7900
	Allowance for Uncollectible Accounts		7900
Date	General Journal	Debit	Credit
September 30, 2022	Cash	7900
	Accounts Receivable		7900