Age Class Percent Uncollectible Balance $ 892,000 Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due 285,000 1 101,000 63,000 8 16 43,100 50 17,700 $1,401,800 80
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.
- Prontera Co. is a merchandiser of outdoors gear. 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 total balance of the allowance for doubtful accounts should be as of December 31.
- Journalize the
adjusting entry for uncollectible accounts as of December 31.
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