Caplan Corporation Uses the Accounts Receivable Aging Method to Account

question 78

Essay

Caplan Corporation uses the accounts receivable aging method to account for Uncollectible Accounts Expense. As of December 31, Caplan's accountant prepared the following data about ending receivables: $20,000 was not yet due (1 percent expected not to be collected), $10,000 was 1-60 days past due (4 percent expected not to be collected), and $2,000 was over 60 days past due (8 percent expected not to be collected). At December 31, Allowance for Uncollectible Accounts had a credit balance prior to adjustment of $200. In the journal provided, prepare Caplan's end-of-period adjustment for estimated uncollectible accounts. Also prepare the entry that would have been made had the credit balance instead been a debit balance. Omit explanations

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Definitions:

Assimilation

The process of absorbing and integrating new information into existing knowledge.

Denitrifying Bacteria

Microorganisms that convert nitrates in the soil to nitrogen gas, playing a vital role in the nitrogen cycle.

Atmospheric Nitrogen

A component of the Earth's atmosphere, making up about 78% by volume, primarily in the form of nitrogen gas (N2).

Organic Nitrogen Compounds

Chemical compounds that contain carbon and nitrogen, playing various roles in the metabolism of living organisms.