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10 April, 07:27

At December 31, 2018, the Accounts Receivable balance of GPC Technology is $200,000. The Allowance for Bad Debts account has a $11,020 debit balance. GPC Technology prepares the following aging schedule for its accounts receivable: Begin by determining the target balance of Allowance for Bad Debts by using the age of each account

Total Age of Accounts 31-60 61-90 Days Days $ 65,000 $ 55,000 5.0 7.0 1-30 Days 70,000 0.6 % Balance Over 90 Days $ 10,000 50.00

1. Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018

2. Show how GPC Technology will report its net accounts receivable on its December 31, 2018, balance sheet.

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  1. 10 April, 07:35
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    1. Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018}

    Dr Bad debt expense 23,540

    Cr Allowance for doubtful accounts 23,540

    2. Show how GPC Technology will report its net accounts receivable on its December 31, 2018, balance sheet.

    Accounts receivable $200,000

    Allowance for doubtful accounts ($12,520)

    Net accounts receivable $187,480

    Explanation:

    Total Age of Accounts

    1-30 Days $70,000 x 0.6 % = $420

    31-60 Days $65,000 x 5% = $3,250

    61-90 Days $55,000 x 7% = $3,850

    Balance Over 90 Days $10,000 x 50% = $5,000

    total $12,520 + $11,020 (debit balance) = $23,540
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