Question

Blain Company has $10,000 of accounts receivable that are current, $5,000 that are between 0 and 30 days past due, $3,000 that are between 30 and 60 days past due, and $800 that are more than 60 days past due. Blain estimates that 2% of the receivables that are current will be uncollectible, 5% of those between 0 and 30 days past due will be uncollectible, 10% of those between 30 and 60 days past due will be uncollectible, and 50% of those more than 60 days past due will be uncollectible. Just prior to recognizing uncollectible accounts expense, Blain’s allowance for doubtful accounts account has a $100 positive balance. Assuming Blain uses the aging method to estimate uncollectible accounts expense, the amount of uncollectible expense will be:

Answer 1

$1050 Using the aging method

Step-by-step explanation:

$10,000 of accounts receivable that are current

$5,000 that are between 0 and 30 days past due

$3,000 that are between 30 and 60 days past due

$800 that are more than 60 days past due.

The percentages of the following accounts will be uncollectible

2% of $10000 are uncollectible=$200

5% of $5,000=$250

10% of 3000=$300

50% of $800=$400

the sum of the uncollectible is $1150

Note: Blain’s allowance for doubtful accounts account has a $100 positive balance.

so $1150-$100=$1050

Answer 2

Assuming Blain uses the aging method to estimate uncollectible accounts expense, the amount of uncollectible expense will be:

$1050

Step-by-step explanation:

Aging

Current 10000 2% 200

1-30 5000 5% 250

31-60 3000 10% 300

Over 60 800 50% 400

1150

Allowance bad debts 100

Expense 1050