Perry Materials uses the aging method and has completed the following analysis of the accountsreceivable:Over 90 TotalBalanceCustomer1-30 Days 31-60 Days 61-90 Days DaysJohnson$4,600$3,200$7,800Hot Pots, Inc.8001,0001,800Potter40,00055040,550Harrison3,6009004,500Marx2,000502,050Younger65,00065,000Merry Maids5,9005,900Acher12,0006,40018,400Totals$127,500$13,750$3,700 $1,050$146,000Uncollectible percentage2%10%20%40%Estimated uncollectibleamount$2,550$1,375$740$420$5,085Required:1. How much will the Uncollectible account expense for the year be?2. What will the final balance in the Allowance account be, after adjusting for uncollectibleaccount expense?

Answered: 1. How much will the Uncollectible…

1. How much will the Uncollectible account expense for the year be? 2. What will the final balance in the Allowance account be, after adjusting for uncollectible account expense?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Perry Materials uses the aging method and has completed the following analysis of the accounts
receivable:
Over 90 Total
Balance
Customer
1-30 Days 31-60 Days 61-90 Days Days
Johnson
$4,600
$3,200
$7,800
Hot Pots, Inc.
800
1,000
1,800
Potter
40,000
550
40,550
Harrison
3,600
900
4,500
Marx
2,000
50
2,050
Younger
65,000
65,000
Merry Maids
5,900
5,900
Acher
12,000
6,400
18,400
Totals
$127,500
$13,750
$3,700 $1,050
$146,000
Uncollectible percentage
2%
10%
20%
40%
Estimated uncollectible
amount
$2,550
$1,375
$740
$420
$5,085
Required:
1. How much will the Uncollectible account expense for the year be?
2. What will the final balance in the Allowance account be, after adjusting for uncollectible
account expense?

Expert Solution

Step 1

There are many methods for the calculation of the Uncollectible expense , Generally these are derived based on the past trend, economic conditions, % of receivables , direct write off etc

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