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Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $46,890 and $3,710, respectively. During the year, the company wrote off $2,770 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule:

Number of Days Past Due Receivables Amount % Likely to be Uncollectible
Current $82,000 1%
0-30 $29,500 5%
31-60 $7,960 10%
61-90 $4,220 25%
Over 90 $3,900 50%
Total $127,580

What will Domino record as Uncollectible Accounts Expense for 2016?

a. $6,096
b. $2,296
c. $5,116
d. $2,820

User PixelToast
by
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1 Answer

4 votes

Answer:

$5,156

Step-by-step explanation:

The computation of the uncollectible account expense is shown below:

But for this, first we have to compute the ending balance of allowance that is shown below

Current $82,000 × 1% = $820

0-30 $29,500 × 5% = $1,475

31-60 $7,960 × 10% = $796

61-90 $4,220 × 25% = $1,055

Over 90 $3,900 × 50% = $1,950

Total $6,096

Now the uncollectible account expense is

= $6,096 + $2,770 - $3,710

= $5,156

This is the answer but the same is not provided in the given options

User Pini
by
7.7k points
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