Adjusting entry to recognize bad debts

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The Montgomery Burns Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2001, before the current year's (2001) provision for uncollectible accounts. An aging of the accounts receivable revealed the following:

 

 

Estimated Percentage Uncollectible

Current Accounts

$120,000

1%

1-30 days past due

12,000

3%

31-60 days past due

10,000

6%

61-90 days past due

5,000

12%

Over 90 days past due

8,000

30%

Total Accounts Receivable

$155,000

 

Assuming that the company uses the percentage of receivables allowance method, prepare the adjusting entry on December 31, 2001, to recognize bad debts expense.

Reference no: EM1312497

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