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 $39,590 and $3,020, respectively. During the year, the company wrote off $2,390 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule: Number of Days Receivables Percentage Likely to Be Past Due Amount Uncollectible Current $ 56,000 1% 0 to 30 23,500 5% 31 to 60 5,360 10% 61 to 90 2,520 25% Over 90 2,200 50% Total $89,580 What will Domino record as Uncollectible Accounts Expense for Year 2

Answer 1

Number of days past due Receivables %Uncollectible Uncollectible

Current 56,000 1% 560

0 to 30 23,500 5% ‭1,175‬

31 to 60 5,360 10% 536

61 to 90 2,520 25% 630

Over 90 2,200 50% 1,100

Total 89,580 ‭4,001‬‬

Uncollectible Amount = ‭4,001‬ - Allowance after write off

Allowance after write off = Opening Allowance - Amount written off during year

= 3,020 - 2,390

= $630

Uncollectible Amount = 4,001 - 630

= $3,371