Final answer:
To determine an uncollectible receivable using the analysis of receivables method, an aging schedule is created to categorize receivables by due date. Historical percentages of uncollectibility are then applied to each category to estimate bad debt, which is recorded in the financial statements.
Step-by-step explanation:
The process by which an uncollectible receivable account is determined using the analysis of receivables method involves evaluating outstanding accounts based on their duration and likelihood of collection. Companies often use an aging schedule of accounts receivable to categorize outstanding debts by their due dates, such as current, 30 days, 60 days, 90 days, and so on. This information is then used to estimate the amount that is unlikely to be collected, by applying historical percentages of uncollectibility to each category. A bad debt expense is then recognized in the financial statements to reflect this estimation. The related amount is removed from accounts receivable, adjusting the overall value of receivables reported on the balance sheet.