Question

V Calculate Zuo Software categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts. 1. Accounts not yet due $400,000; estimated uncollectible 8 %. 2. Accounts 1-30 days past due $50,000; estimated uncollectible 15 %. 3. Accounts 31-90 days past due $40,000; estimated uncollectible 30% 4 Accounts more than 90 days past due $30,000; estimated uncollectible 50% . E 7-14 uncollectible accounts using the aging method; record adjustments At 12/31/2021, before recording any adjustments, Zuo has a credit balance of $22,000 in its allowance for uncollectible accounts. LO7-5, LO7-6 Required: 1. Estimate the appropriate 12/31/2021 balance for Zuo's allowance for uncollectible accounts 2. What journal entry should Zuo record to adjust its allowance for uncollectible accounts? 3. Calculate Zuo's 12/31/2021 net accounts receivable balance.

Answer 1

Consider the following explanations

Step-by-step explanation:

1). Balance of allowance for uncollectible accounts on 12/31/2021 is $66,500.

2). Journal entry for adjusting the allowance for uncollectible account is :

Here we already have $22,000 credit balance in allowace for uncollectible account and hence adjusting entry is of $44,500 which makes the ending balance of allowace for uncollectible account to $66,500 credit.

3). Net account receivable balance on 12/31/2021:

Accounts receivables total = $520,000

Less: Allowance for uncollectible account = $66,500

Net Account Receivables = $453,500