The Montgomery Burns Company had a $700 credit balance in Allowance for Doubtful Accounts at December 31, 2001, before the current year's (2001) provision for uncollectible accounts. An aging of the accounts receivable revealed the following:
|
|
Estimated Percentage Uncollectible
|
Current Accounts
|
$120,000
|
1%
|
1-30 days past due
|
12,000
|
3%
|
31-60 days past due
|
10,000
|
6%
|
61-90 days past due
|
5,000
|
12%
|
Over 90 days past due
|
8,000
|
30%
|
Total Accounts Receivable
|
$155,000
|
|
Assuming that the company uses the percentage of receivables allowance method, prepare the adjusting entry on December 31, 2001, to recognize bad debts expense.