Question

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 $45,930 and $3,620, respectively. During the year, the company wrote off $2,720 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule: Number of days Receivables % Likely to be past due amount uncollectible Current $ 76,000 1% 0-30 28,100 5% 31-60 7,360 10% 61-90 3,820 25% Over 90 3,500 50% Total $ 118,780 What will Domino record as Uncollectible Accounts Expense for Year 2?

Answer 1

The uncollectible accounts expense for the year is $ 4.706

Step-by-step explanation:

Computation of required uncollectible accounts balances

Age of receivable Amount % estimated as Amount

$ Uncollectible Uncollectible

$

Current 76,000 1 % 760

0 - 30 days 28,100 5 % 1,405

31 - 60 days 7,360 10 % 736

61 - 90 days 3,820 25 % 955

over 90 days 3,500 50 % 1,750

Totals 118,780 5,606

Opening balance of allowance for doubtful accounts 3,620

Less: Write off during the year 2,720

Balance of allowance for doubtful account after write off 900

Required balance of allowance for doubtful account 5,606

UncollectIble accounts expenses ( $ 5,606- $ 900 ) $ 4,706