Question

The Physical Therapy Center specializes in helping patients regain motor skills after serious accidents. The center has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $91,000; Allowance for Uncollectible Accounts = $2,100 (debit). The center estimates uncollectible accounts based on an aging of accounts receivable as shown below.

Age Group	Estimated Amount Uncollectible	Estimated Percent Uncollectible
Not yet due	$ 41,000	5%
0-60 days past due	24,100	20%
61=120 days past due	14,100	30%
More than 120 days past due	11,800	85%
Total	$91,000

Required:

 1. Estimate the amount of uncollectible receivables. 

Age Group	Estimated Amount Uncollectible
Not yet due
0-60 days past due
61-120 days past due
More than 120 days past due
Total

2. Record the adjusting entry for uncollectible accounts on December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) 

Answer 1

Ans. 1	Age group	Accounts receivables	Percent un collectible	Amount un collectible
	Not yet due	$41,000	5%	$2,050
	0 - 60 days past due	$24,100	20%	$4,820
	61 - 120 days past due	$14,100	30%	$4,230
	More than 120 days past due	$11,800	85%	$10,030
	Estimated balance of allowance for un collectibles			$21,130
	*Amount un collectible = Accounts receivable * Percentage un collectibles
Ans. 2	No.	General Journal	Debit	Credit
		Bad debt expense	$23,230
		Allowance for doubtful accounts		$23,230
		(To record bad debts expenses)
	*Bad debts expense = Estimated balance of allowance for un collectibles + Un adjusted debit balance
		$21,130 + $2,100
		$23,230