Question

Domino Company uses the percent of receivables method to estimate uncollectible accounts expense. Domino began 2016 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $47,850 and $3,800, respectively. During the year, the company wrote off $2,820 in uncollectible accounts. In preparation for the company's 2016 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

Answer 1

C.$5,116

Step-by-step explanation:

Doubtful Accounts Closing Balance can be worked out as follows

(82,000*1%+29,500*5%+7,960*10%+4,220*25%+3,900*50%)=$6,096

Allowance for doubtful Accounts-Opening A $3,800

Allowance for doubtful Accounts-Closing B $6,096

For the year Expense C= (B-A) $2,296

Written of Amount of A/R D $2,820

Total Uncollectible Accounts Expense=C+D $,5,116