Question

Performance Bike Co. is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31.
Performance Bike Co.
Estimation of Uncollectible Accounts
December 31
Age Interva l Balance Estimated Uncollectible Estimated Uncollectible
Accounts Percent Accounts Amount
Not past due $890,000 3/4% $
1-30 days past due 97,900 2%
31-60 days past due 44,500 6%
61-90 days past due 32,000 16%
91-180 days past due 23,100 40%
Over 180 days past due 16,900 65%
Total $1,104,400

Answer 1

$36,648

Step-by-step explanation:

age balance % uncollectible total

Not past due $890,000 3/4% $ 6,675

1-30 days past due $97,900 2% $ 1,958

31-60 days past due $44,500 6% $2,670

61-90 days past due $32,000 16% $ 5,120

91-180 days past due $23,100 40% $ 9,240

Over 180 days past due $16,900 65% $10,985

Total $1,104,400 $36,648

journal entry should be:

December 31, 202x, bad debt expense

Dr Bad debt expense 36,648

Cr Allowance for doubtful accounts 36,648