Accounting Homework Week 3

hw20ch20720b-07.0520aging20ar.xls

Problem

Wiggins Corporation utilizes an accounting software package that is capable of producing a detailed aging of outstanding accounts receivable. Following is the aging schedule as of December 31, 20X2.
		AGE	AMOUNT OUTSTANDING
		0 to 30 days	$ 1,200,000
		31 to 60 days	700,000
		61 to 120 days	200,000
		Over 120 days	25,000
Casper Wiggins has owned and operated Wiggins Corporation for many years and has a very good sense of the probability of collection of outstanding receivables, based on an aging analysis. The following table reveals the likelihood of collection:
		AGE	PROBABILITY OF COLLECTION
		0 to 30 days	98%
		31 to 60 days	90%
		61 to 120 days	75%
		Over 120 days	50%
(a)	Prepare an aging analysis and show how accounts receivable and the related allowance for uncollectibles should appear on the balance sheet at December 31.
(b)	Prepare the necessary journal entry to update the allowance for uncollectibles, assuming the balance prior to preparing the aging was a $15,000 credit.
(c)	Prepare the necessary journal entry to update the allowance for uncollectibles, assuming the balance prior to preparing the aging was a $5,000 debit. How could the allowance account have contained a debit balance?

&R&"Myriad Web Pro,Bold"&20B-07.05

B-07.05

(a)		AGE	BALANCE	ESTIMATED % UNCOLLECTIBLE	ESTIMATED AMOUNT UNCOLLECTIBLE
		0 to 30 days
		31 to 60 days
		61 to 120 days
		Over 120 days
	Accounts Receivable
	Less: Allowance for Uncollectible Accounts					$ -

&L&"Myriad Web Pro,Bold"&12Name: Date: Section: &R&"Myriad Web Pro,Bold"&20B-07.05(a)

B-07.05(a)

&L&"Myriad Web Pro,Bold"&12Name: Date: Section: &R&"Myriad Web Pro,Bold"&20B-07.05(b,c)

B-07.05(b,c)