On December 31, the Jacob, Inc. general ledger contained the following balances prior to write-offs

QUESTION:

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On December 31, the Jacob, Inc. general ledger contained the following balances prior to write-offs and adjustments:

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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.

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Aging of the accounts receivable balance after the write-off on December 31 indicated the following:

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Estimated Percentage
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Age

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Amount Uncollectible
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Under 30 days

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$358,900 1.5%
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30-90 days

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134,000 3.0%
91-180 days 96,000 n

7.0%

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181-360 days 22,700 n

20.0%

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Over 360 days 4,350 n

60.0%

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$615,950

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Required:

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1. Prepare the necessary journal entry to record the write-off.

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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.

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3. What is the net realizable value of accounts receivable on the December 31 balance sheet?

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