Reference no: EM13558724

(Bad-Debt Reporting) Presented below is information related to the Accounts Receivable accounts of Gulistan Inc. during the current year 2012.

1. An aging schedule of the accounts receivable as of December 31, 2012, is as follows.

Age	Net   Debit Balance	% to Be Applied after   Correction Is Made
Under 60   days	$172,342	1%
60-90   days	136,490	3%
91-120   days	39,924*	6%
Over 120   days	23,644	$3,700 definitely uncollectible;
	$372,400	estimated remainder
		uncollectible is 25%

2. The Accounts Receivable control account has a debit balance of $372,400 on December 31, 2012.

3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,240 on November

3, 2012, and a debit to Allowance for Doubtful Accounts because of a bankruptcy.

4. Allowance for Doubtful Accounts is as follows for 2012.

Allowance for Doubtful Accounts
Nov. 3	Uncollectible   accounts		Jan. 1	Beginning   balance	8,750
	written   off	3,240	Dec. 31	5% of   $372,400	18,620

5. A credit balance exists in the Accounts Receivable (60-90 days) of $4,840, which represents an advance on a sales contract.

Instructions

Assuming that the books have not been closed for 2012, make the necessary correcting entries.