Question

Pearl E. White Orthodontist specializes in correcting misaligned teeth. During 2021, Pearl provides services on account of $577,000. Of this amount, $67,000 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		$	27,000				4	%
0-90 days past due			14,700				20	%
91–180 days past due			9,700				25	%
More than 180 days past due			15,600				70	%
Total		$	67,000

. Record the December 31, 2021, adjusting entry, assuming the balance of Allowance for Uncollectible Accounts before adjustment is $3,700 (credit).

Answer 1

Adjusting entry to record the provision is as below:

Bad & Doubtful Debts Dr. $13,665

To Provision for Bad & Doubtful Debts $13,665

(Being provision made for bad & doubtful debts for year 2021)

Calculation of provision amount is as below:

Amount Receivable	% uncollectible	Amount of Provision required (Amount Receivable X Percent Uncollectible)
27,000	4%	1,080
14,700	20%	2,940
9,700	25%	2,425
15,600	70%	10,920
	Total Provision required (Sum of above)	17,365
Less	Opening Provision	3,700
	Net Provision required for year 2021 (Total Provision - Opening Provision)	13,665