Final answer:
The sum of the estimated uncollectible amounts determined by applying different percentages to the age groups of accounts receivable represents the Allowance for doubtful accounts, a contra account on the balance sheet.
Step-by-step explanation:
When aging of accounts receivable is used, this accounting practice involves categorizing outstanding customer invoices by their due dates to estimate the amount of receivables that are unlikely to be collected. This method helps in assessing the health of a company's accounts receivable and in estimating potential bad debts. Each age category has its corresponding uncollectible percentage rate that reflects the likelihood of receivables turning into bad debts. These percentages are applied to the respective age groups to calculate the estimated uncollectible amount for each group.
By adding up all of these estimated uncollectible amounts, we determine the total provision that should be made for the accounting period in question. This total is referred to as the allowance for doubtful accounts, which is a contra account that offsets the total accounts receivable on a company's balance sheet, thereby showing the net amount that is expected to be collected.
The correct answer to the student's question is (c) Allowance for doubtful accounts, which represents the sum of all estimated uncollectible amounts from the respective age categories.