In: Accounting
The Physical Therapy Center specializes in helping patients regain motor skills after serious accidents. The center has the following balances on December 31, 2021, before any adjustment Accounts Receivable = $94.000, Allowance for Uncollectible Accounts $2,400 (debit). The center estimates uncollectible accounts based on an aging of accounts receivable as shown below.
Age Group | Amount Receivable | Estimated Percent Uncollectible |
Not yet due | $ 44,000 | 5% |
0 - 60 days past due | 24,400 | 20% |
61-120 days past due | 14,400 | 30% |
More than 120 days past due | 11,200 | 85% |
Total | $ 94,000 | |
Required:
1. Estimate the amount of uncollectible receivables.
Age Group | Estimated Amount Uncollectible |
---|---|
Not yet due | |
0-60 days past due | |
61-120 days past due | |
More than 120 days past due | |
Total |
2. Record the adjusting entry for uncollectible accounts on December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required in the first account field.)
3. Calculate net accounts receivable
1) Estimated amount of uncollectible
Estimated amount of uncollectible | |
Not yet due | 2200 |
0-60 days | 4880 |
61-120 days | 4320 |
Over 120 days | 9520 |
Total | 20920 |
2) Adjusting entry
Date | account and explanation | Debit | Credit |
Dec 31 | Bad debt expense (20920+2400) | 23320 | |
Allowance for doubtful accounts | 23320 | ||
3) Balance sheet presentation
Total account receivable | 94000 |
Less: Allowance for doubtful accounts | -20920 |
New account receivable | 73080 |