At December 31, before any year end adjustments, the accounts receivable balance of Sunset Hills Clinic is $235,000. The allowance for doubtful accounts has a $7,400 credit balance. Sunset Hills prepares the following aging schedule for accounts receivable.
Total Balance $235,000
1-30 days $110,000 @0.5% Estimated uncollectible
31-60 days@ $60,000 @ 1.0%
61-90 days $50,000 @ 6%
Over 90 days $15,000 @ 40%
Required:
1. Based on the aging of accounts receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?
2. Make an entry required by the aging schedule. Prepare a T-account for the allowance
3. Show how Sunset Hills Clinic will report Accounts Receivable on its Dec. 31 balance sheet. Include the 2 accounts that come before receivables on the balance sheet, using assumed amounts,
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