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Y7-4 (Bad-Debt lteporting) Frorn inception of operations December 31, 201*, Fortner Corporation
provided for uncollectible accourrts receivable lrurler the allou'ance metirod: provisior,s r,t'ere rnade
monthly at ZVa ** credtteales; bad debts written att were *halged ta the allo%rance af,count recoveries of
bad debts pr-eviousiy rvritten off nere creclited to tl're aiion,ance acconnt; and no year-enrl adjttstnrt:trts to
the allorvauce accourtt s'ere made. Fortuer's usuai credit terlns are net 30 days-
Tire baiance in the Allowance for Doubtfr:l Accottuts rvas f1i10,00{i at ]anuary 1,2-0fi. During 2010
credit sales totaled f9s0s,0s0, interim provisions for doubtful accouflts rvere made at 2% ol credit sales,
{90,0u0 af bad debts were written aff, a*d recoveries o{ accsunts previous$ rqritten off amounted to
f15,000. Forhrer installed- a cotnPuter system i:n Noveurber 281A, ao.'td ao aging of accountr receivable 1\'45
prepared fsr the first time as of D€eember 31, 2010. A summary of the aging is as follolirs,
by
Classification Balance in Eslirnatsd 7o
Month of Sale Each Calegory Uncollectible
November-Beoember 201 0 81,080,00c 2%
July-October 650,000 10%
January-June 420,000 25YD
1 trn nnn ano/,
Frlar ta lfihA
Erulgpqq

Eased on the review o{ collectibiiify of the accounf balances in the "prior lo 1/1/10* aglng categary,
additionai receivables totaling 860,S00 were written of{ as of December 31,201A. The 807o uncoll€ctible
estirnate applies to the remaining g90,S00 tn ltrre ategory. Effective with fhe year ended Decen'lber 31,
201& Fortn& adopted a dif{erent nnetf,oA for estimating the allorvance for doubtfutr accounts at the afirount
indicated W the year-end aging ana$sis of a{counts receivable.
Instructisns
{a} ?repare a sclredule a{rapzLng the chatges in the Allowance for Doubtful Accounts for the year
end"d D*ce*ber 31, 201"0. Sliow suppoiting cornputations in good farrn. \Hint: In computing the
12/31/tO allowance, subfract the f50,000 rffite-oJf.)
{b} Frepare the iournal entry for the year-end adiustment to the Allou'aace for Doubtful Accounts
balance as of Decennber 31,207*.