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Credit Losses Based on Accounts Receivable Maxell, Inc., analyzed its accounts receivable balances at December 31,...
Credit Losses Based on Accounts Receivable Maxell, 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 $101,000 1% 31-60 days past due 19,000 3% 61-120 days past due 21,000 6% 121-180 days past due 8,000 10% Over 180 days past due 3,000 20% $152,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $940 on December 31, before any adjustments. Prepare the adjusting entry for estimated credit losses on December 31. Prepare the journal entry to write off the Porter Company's account on May 12 of the following year in the amount of $580 a. General Journal Date Description Debit Credit Dec.31 To record allowance for credit losses. b. General Journal Date Description Debit Credit May 12 To write off Porter Company's account.
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