3. Timken Inc. made $900,000 in sales during 2016. Twenty-five percent of these were cash sales.
3. Timken Inc. made $900,000 in sales during 2016. Twenty-five percent of these were cash sales. During the year, $22,500 of accounts receivable were written off as being uncollectible. In addition, $13,500 of the accounts that were written off in 2015 were unexpectedly collected. At its’ year-end December 31, 2016, Timken had $225,000 of accounts receivable. The balance in the Allowance for Doubtful Accounts general ledger account was $13,500 credit at December 31, 2015.
| Age (days) | Accounts
Receivable |
| 1-30 | $ 90,000 |
| 31-60 | 45,000 |
| 61-90 | 22,500 |
| 91-120 | 54,000 |
| Over 120 | 13,500 |
| Total | $225,000 |
Required:
- Prepare journal entries to record the following 2016 transactions:
- The write-off of $22,500
- The recovery of $13,500
- Recalculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2016.
- The estimated uncollectible accounts at December 31, 2016 are calculated as follows:
| Age (days) | Estimated
Loss percentage |
| 1-30 | 1.5% |
| 31-60 | 3% |
| 61-90 | 4% |
| 91-120 | 9% |
| Over 120 | 45% |
Required: Prepare the adjusting entry required at December 31, 2016.
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