Compute the required balance of the Allowance for Doubtful Accounts at December 31 using an aging of accounts receivable.
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.
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On December 31, Jarden Company's Allowance for Doubtful Accounts has an unadjusted credit balance of $14,500. Jarden prepares a schedule of its December 31
| Accounts Receivable | Age of Accounts Receivable | Expected Percent Uncollectible |
|---|---|---|
| $ 820,000 | Not yet due | 1.25% |
| 328,000 | 1 to 30 days past due | 2.00 |
| 65,600 | 31 to 60 days past due | 6.50 |
| 32,800 | 61 to 90 days past due | 32.75 |
| 13,120 | Over 90 days past due | 68.00 |
Required:
1. Compute the required balance of the Allowance for Doubtful Accounts at December 31 using an aging of accounts receivable.
Jarden company has made allowance for doubtful debts to occur for the year ending dec 31, let's calculate the required balance using the aging of account recivable.
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