Classification by Month of Sale Balance in Each Estimated % Uncollectible Category $1,140,000 600,000 400,000 130,000 $2,270,000 Nov.-Dec. 2019 July-Oct. Jan-June Prior to 1/1/2019 2% 10 25 75

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Allowance for Doubtful Accounts From inception of operations to
December 31, 2018, Harris Corporation provided for uncollectible
accounts receivable under the allowance method Provisions were nude
monthly at 2% of credit sales; bad debts written off were charged to the
allowance account; recoveries of bad debts previously written off were

credited to the allowance account; and no year-end adjustments to the
allowance account were made. Harris's usual credit terms are net 30
days.

The balance in the Allowance for Doubtful Accounts was $130,000 at
January 1, 2019. During 2019, credit sales totaled $9,000,000, interim
provisions for doubtful accounts were made at 2% of credit sales,

$90,000 of bad debts were written off, and recoveries of accounts
previously written off amounted to $15,000. Harris upgraded its
computer facility in November 2019, and an aging of accounts receivable
was prepared for the first time as of December 31, 2019. A summary of
the aging is as follows:

Based on the review of collectibility of the account balances in the "prior
to 1/1/2019" aging category, additional receivables totaling $60,000 were
written off as of December 31, 2019 Effective with the year ended

December 31, 2019, Harris adopted a new accounting method for
estimating the allowance for doubtful accounts at the amount indicated
by the year-end aging analysis of accounts receivable.

Required:

1. Prepare a schedule analyzing the changes in the allowance for
doubtful accounts for the year ended December 31, 2019. Show
supporting computations in good form.
2. Prepare the journal entry for the year-end adjustment to the
Allowance for Doubtful Accounts balance as of December 31, 2019.

Classification by
Month of Sale
Balance in Each
Estimated %
Uncollectible
Category
$1,140,000
600,000
400,000
130,000
$2,270,000
Nov.-Dec. 2019
July-Oct.
Jan-June
Prior to 1/1/2019
2%
10
25
75
Transcribed Image Text:Classification by Month of Sale Balance in Each Estimated % Uncollectible Category $1,140,000 600,000 400,000 130,000 $2,270,000 Nov.-Dec. 2019 July-Oct. Jan-June Prior to 1/1/2019 2% 10 25 75
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