Reference no: EM132592325

Question - Miller, Inc., analyzed its accounts receivable balances at December 31 and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible:

Age Group Balance Probability of Noncollection

0-30 days past due $180,000 1%

31-60 days past due 40,000 3%

61-120 days past due 22,000 5%

121-180 days past due 14,000 10%

Over 180 days past due 8,000 25%

$264,000

The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $1,150 on December 31, before any adjustments.

Required -

1. Prepare the adjusting entry for estimated credit losses on December 31.

2. Prepare the journal entry to write off the Lyons Company's account on April 10 of the following year in the amount of $525.