On December 31, the Jacob, Inc. general ledger contained the following balances prior to write-offs and adjustments:
Before completing an aging analysis to determine the estimated amount uncollectible, Jacob decided to write off $7,500 of an account past due over 360 days.
Aging of the accounts receivable balance after the write-off on December 31 indicated the following:
Under 30 days
|Over 360 days||4,350||
1. Prepare the necessary journal entry to record the write-off.
2. Prepare the adjusting journal entry on December 31 to record Jacob, Inc.’s estimated bad debts assuming that the company uses the aging of accounts receivable method.
3. What is the net realizable value of accounts receivable on the December 31 balance sheet?