Question

Estimating Doubtful Accounts Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows: Age Class Balance Percent Uncollectible Not past due $908,000 1/2 % 1–30 days past due 99,900 2 31-60 days past due 45,400 8 61–90 days past due 32,700 14 91–180 days past due 23,600 40 Over 180 days past due 17,300 75 $1,126,900 Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31. Age Class Balance Percent Uncollectible Estimated Uncollectible Accounts Amount Not past due $908,000 1/2% $ 1-30 days past due 99,900 2 31-60 days past due 45,400 8 61-90 days past due 32,700 14 91-180 days past due 23,600 40 Over 180 days past due 17,300 75 Total $1,126,900 $

Answer 1

• Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31.

Bad debt expense $ 37,163

Allowance for Uncollectible Accounts $ 37,163

Step-by-step explanation:

Initial Balance

Accounts Receivable $ 1,126,900

Allowance for Uncollectible Accounts $ 0,000

Acc. Rec Allow.

$908,000 $ 4.540 0,5% Not Past Due

$99,900 $ 1.998 2% 1–30 days past due

$45,400 $ 3.632 8% 31-60 days past due

$32,700 $ 4.578 14% 61–90 days past due

$23,600 $ 9.440 40% 91–180 days past due

$17,300 $ 12.975 75% Over 180 days past due

$1,126,900 $ 37.163 3%

Bad debt expense $ 37,163

Allowance for Uncollectible Accounts $ 37,163

Final Balance

Accounts Receivable $ 1,126,900

Allowance for Uncollectible Accounts $ 37,163