2. Estimating Uncollectible Accounts and Reporting Accounts Receivable: Collins Company analyzes its accounts receivable at December 31 and arrives at the age categories below along with the percentages that are estimated as uncollectible. The balance of the allowance for uncollectible accounts is $1,100 on December 31, before any adjustments. Age Group Accounts Receivable 0-30 Days Past Due 31-60 Days Past Due 61-120 Days Past Due 121-180 Days Past Due Over 180 Days Past Due Total A/R $110,000 $40,000 $27,000 $14,000 $9,000 $200,000 Estimated Loss % 1% 2% 5% 10% 25% a. What amount of bad debt expense will Collins reports in its income statement for the year? Estimated bad debets = accoutns receivable Estimated loss under each group (110,000 1 %) + ($40,000 2 %) + ($27,000 5% ) + ($14,000 10 %) + ($9,000 25%) = $6,900 . . b. Use the financial statement effects template to record Collins' bad debt expense for the year. Bad debets expense = Estimated bad debets - balance in allowance account $6,900 $1,100 = $5,800 c. What is the balance of accounts receivable on its December 31 balance sheet? d. What is the amount (as a %) of estimated uncollectible receivables?
2. Estimating Uncollectible Accounts and Reporting Accounts Receivable: Collins Company analyzes its accounts receivable at December 31 and arrives at the age categories below along with the percentages that are estimated as uncollectible. The balance of the allowance for uncollectible accounts is $1,100 on December 31, before any adjustments. Age Group Accounts Receivable 0-30 Days Past Due 31-60 Days Past Due 61-120 Days Past Due 121-180 Days Past Due Over 180 Days Past Due Total A/R $110,000 $40,000 $27,000 $14,000 $9,000 $200,000 Estimated Loss % 1% 2% 5% 10% 25% a. What amount of bad debt expense will Collins reports in its income statement for the year? Estimated bad debets = accoutns receivable Estimated loss under each group (110,000 1 %) + ($40,000 2 %) + ($27,000 5% ) + ($14,000 10 %) + ($9,000 25%) = $6,900 . . b. Use the financial statement effects template to record Collins' bad debt expense for the year. Bad debets expense = Estimated bad debets - balance in allowance account $6,900 $1,100 = $5,800 c. What is the balance of accounts receivable on its December 31 balance sheet? d. What is the amount (as a %) of estimated uncollectible receivables?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
am. 124..
Transcribed Image Text:2. Estimating Uncollectible Accounts and Reporting Accounts Receivable: Collins Company
analyzes its accounts receivable at December 31 and arrives at the age categories below along
with the percentages that are estimated as uncollectible. The balance of the allowance for
uncollectible accounts is $1,100 on December 31, before any adjustments.
Age Group
0-30 Days Past Due
Accounts Receivable
Estimated Loss %
1%
2%
5%
10%
25%
31-60 Days Past Due
61-120 Days Past Due
121-180 Days Past Due
Over 180 Days Past Due
Total A/R
=
$110,000
$40,000
$27,000
$14,000
$9,000
$200,000
a. What amount of bad debt expense will Collins reports in its income statement for the
year?
Estimated bad debets = accoutns receivable Estimated loss under each group
(110,000 1%) + ($40,000+2%) + ($27,000 + 5%) + ($14,000 10 %) + ($9,000 25%)
= $6,900
b. Use the financial statement effects template to record Collins' bad debt expense for the
year.
Bad debets expense = Estimated bad debets - balance in allowance account
C.
$6,900 $1,100
= $5,800
What is the balance of accounts receivable on its December 31 balance sheet?
d. What is the amount (as a %) of estimated uncollectible receivables?
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