Question

A yearminusend review of Accounts Receivable and estimated uncollectible percentages revealed the​ following:

Days Outstanding Accounts Receivable Est. Percent Uncollectible
1 -30days $ 60, 000 3​%
31-60 days $ 40,000 5​%
61-90 days $ 25, 000 12​%
Over 90 days $ 7, 000 50​%
Before the yearminusend ​adjustment, the credit balance in Allowance for Uncollectible Accounts was $ 1, 000. Under the agingminusofminusreceivables ​method, the UncollectibleminusAccount Expense at yearminusend ​is _______?

Answer 1

The Uncollectible Account Expense at year end ​is $9,300

Step-by-step explanation:

At the end of the year:

Estimated Uncollectible = $60,000 x 3% + $40,000 x 5% + $25,000 x 12% + $7,000 x 50% = $10,300

The company uses aging of receivables ​method. Before adjustment, the credit balance in Allowance for Uncollectible Accounts was $ 1,000. Therefore: Uncollectible Account Expense = $10,300 - $1,000 = $9,300

The entry:

Debit Uncollectible Account Expense $9,300

Credit Allowance for Uncollectible Accounts $9,300