steelhead company supplies flies and fishing gear to sporting goods stores and outfi 491996

Allowance method for doubtful accounts

Steelhead Company supplies flies and fishing gear to sporting goods stores and outfitters throughout the western United States. The accounts receivable clerk for Steelhead prepared the following partially completed aging-of-receivables schedule as of the end of business on December 31, 2008.

Days Past Due Not Past Over

Customer Balance Due 1 – 30 31 – 60 61 – 90 91 – 120 120

Totals 895,900 454,800 249,500 101,700 33,900 32,100 23,900

Steelhead Company has a past history of uncollectible accounts by age category.

Age Class Percent Uncollectible Not past due 2%

1-30 days past due 5

31-60 days past due 10

61-90 days past due 25

91-120 days past due 45

Over 120 days past due 90

Instructions:

1. Determine the number of days past due for each of the preceding accounts.

2. Complete the aging-of-receivables schedule.

3. Estimated the allowance for doubtful accounts, based on the aging-of-receivables schedule.

4. Assume that the allowance for doubtful accounts for Steelhead Company has a debit balance of $3,199 before adjustment on December 31, 2007. Journalize the adjusting entry for uncollectible accounts.