An aging analysis of Yamoto Limited’s at December 31, 2012 and 2011, showed the following:
1. At December 31, 2011, the unadjusted balance in Allowance for Doubtful Accounts was a credit of $9,000.
2. In 2012, $42,000 of accounts were written off as uncollectible and $3,000 of accounts previously written off were recovered.
Instructions
(a) Prepare an to calculate the estimated uncollectible accounts at December 31, 2011 and 2012.Comment on the results.
(b) Record the adjusting entry relating to bad debts on December 31, 2011.
(c) Record the write-off of uncollectible accounts in 2012.
(d) Record the collection of accounts previously written off in 2012.
(e) Prepare the adjusting entry relating to bad debts on December 31, 2012.
(f) Calculate the net realizable value of Yamoto’s at December 31, 2011 and 2012.
(g) Do you think that Yamoto was conservative when estimating bad debts expense? Explain.
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